It was essential for Bethlehem Sandwich Shop, LLC to take action and ask for permission to transfer from Quiznos. Given that Bethlehem Sandwich Shop, LLC was authorized to operate by Quiznos, it would have been detrimental to transfer the license without first notifying the franchisor. (Quiznos). A major decision like transferring the ownership right could not be delegated because it was a condition of the covenant that Quiznos permit the franchisee (Bethlehem Sandwich Shop, LLC) to use its trade name. As a result, getting consent before starting the project was crucial. Bethlehem Sandwich Shop, LLC is still responsible to Quiznos even after the franchise was
transferred to Smith. The underlying reason is that there is a clause in the franchise agreement requiring so. The clause asserts that Quiznos has the mandate to terminate the agreement suppose the franchisee failed to operate its operations in conformity to the set standards. The clause further provides that the failure to act in accordance with the rules would lead to material impairment of the goodwill linked with the trade and brand name of Quiznos. As such, the agreement still holds Bethlehem Sandwich Shop, LLC responsible to Quiznos regardless of the transfer of ownership.
Question 2
The covenant not to compete prohibits Bethlehem Sandwich Shop, LLC and its owners from not only operating but also owning a similar fast food store within the vicinity for two years. In my belief, the covenant is enforceable as it is to a large extent reasonable. Even though the legal system is likely to place value on the freedom to operate or do business at a location of one’s preference, the covenant in question is reasonable in that it safeguards the new owner from facing stiff competition from the seller of the premise. In the case of Bethlehem Sandwich Shop, LLC, it would be unjust to own or operate another fast food store within the area after selling the shop to Smith.
Question 3a
In his defense, Smith could raise the argument that while operating under the authorization of Quiznos, he was entitled to quality services. Such services entail the provision for a request for improvement, just as he did.
Question 3b
In the event Smith has enquired about the actions that would amount to a "material impairment of goodwill," the details of such a conversation would be applied in court in Smith's defense. Such details would be included in writing while drafting the covenant; hence it could amount to evidence of a breach of contract.
Question 4
There is too much discretion on the side of Quiznos in the franchise agreement with Smith. If I were Smith’s attorney, I would be much concerned with the provision that he buys all food and non-food supplies from Quiznos at set prices. I would improve this concern by supposing that it should not be mandatory for Smith to buy the supplies, and if a must, the prices be negotiable. Also, I would raise concerns over the provision for a “material impairment of goodwill” by proposing that specific conditions be indicated to avoid ambiguity. On the other hand, if I was buying the franchise, I would demand Quiznos to promise non-interference in the store. One of the most important conditions I would push for is Quiznos to only offer advertising and marketing support, and that the effectiveness of the advertisement offered to be evaluated on a monthly basis.
Question 5a
Benefit-of-the-bargain damages imply damages to be paid to the injured party by a bleaching party to a contract. The damages are marked by the difference between the actual value of the security and what the defendant represented its worth to be during the point of sale.
Question 5b
There is an alternative method that can be used, and this is the out-of-pocket measure. In this method, the defrauded party has the chance to recover the difference between the value they have paid and the actual worth that is received.
Question 5c
The liquidated damages clause sets in to compensate both parties in case of a breach. Regarding the damages, the court should respect this clause since it clearly states the way forward in case either of the parties breaches the signed contract.
Problem 2
Question 1
Considering that Sven had a terrible accident while skiing using the Speedo Corp skis, and that he got injured, he may recover damages for his injuries. Under the theory of negligence, Sven is likely to recover costs. According to the theory, a manufacturer owes a duty of care when it is in his knowledge that a thing will be used by persons other than the buyer, and used without new tests, then damage resulting from the use is on the manufacturer. This is irrespective of a contract as there is a duty to the foreseeable client. In the case of Sven, it can be ascertained that the manufacturer did not conduct tests on the skis, hence exposing consumers to potential injuries in the event the skis snap.
The likelihood of success is considerably high with the consideration of the level of negligence by Speedo Corp. Besides, the two skiers are not only enthusiastic but also considered as Olympic caliber; hence they are experienced in the game. In this way, the manufacturer cannot pin the blame on Sven on the basis of being an amateur.
Sven can also recover damages under warranties theory, particularly express warranties. According to express warranties, a retailer or manufacturer is held legally responsible in tort for overall representations that can be relied upon by the client. This is in spite of contractual tie between the complainant (in this case Sven) and Speedo Corp, the defendant. Under this theory, the manufacturer, Speedo Corp is liable for Sven’s injuries since the two skiers fully relied on the reputation of the company in purchasing the skis. Besides, the manufacturer has advertised the skis on a trade magazine, with full detail of how the tools represent a major technological breakthrough.
Question 2
Besides, the skis injured a third party, i.e., a person other than the consumer, a bystander. The bystander was inflicted with severe facial cuts. The contract for the buying of the skis indicated that the product carried no warranties except those expressly stated elsewhere in the contract. Nonetheless, there were no warranties indicated elsewhere in the skis contract. In this sense, the company was preying on it consumers or clients since it vaguely issued a statement on warranties with full information that there were no warranties elsewhere in the contract.
The injured bystander can recover damages. This under the strict product liability- Restatement 402 A theory of tort recovery. The theory sheds light on the special liability of manufacturer or seller of the product for any physical harm to user or consumer. The theory further states that selling of such a product in a defective condition that is unreasonably risky to the user/consumer or his property is responsible for any physical harm to the ultimate user or consumer and his property. This theory shows that the manufacturer is not only legally responsible to the consumer but also to the third party, since in this case, it includes even the properties of the user.
Problem 3
Question 1
Strict product liability is a theory of tort recovery that states that a manufacturer, seller or distributor of a defective product is held legally responsible to the person injured by the product (Clarkson, Miller and Cross 136). This is in spite of the defendant doing everything possible to prevent the occurrence of the defect. In strict liability, the behavior of the defendant before the product release does not matter (Clarkson, Miller and Cross 136).
As Peter’s lawyer, I will need to gather information about the product for the lawsuit. Such data include the condition in which the anti-depressant was sold to Peter. This information is essential as I will need to prove that the FDA approved the drug that was later sold in an unreasonable lethal condition. Besides, I will gather information on if the seller or distributor expected and had intentions that the drug would reach Peter with no changes to it. Lastly, and which is pretty evident in this scenario, I will need to prove that the plaintiff or their property (Peter in this case) was injured by the product that is considered defected. Such information will be pertinent to hold FDA liable for approving a faulty or defective drug.
In this case, the kind of defect is the design defect, which implies the existence of faults in the design of the whole line of product. Such defect type makes each product distributed to be dangerous in regard to its intended use. The anti-depressant approved by FDA, and which was sold to Peter had design defects in that its impacts were cumulative over a period of time; hence it compelled Peter to contemplate and finally commit suicide.
Question 2
A person injured by a product from a manufacturer or seller may argue in court that the injury was as a result of the reliance on some warranties or promises by the manufacturer, but which consequently turned out to be untrue. In this case, the drugs used by Peter are linked to his final decision to commit suicide, and as such, the parents can seek damages for the loss of their son. In ascertaining the breach of warranty, I will need information about the promises or guarantees made by the manufacturer as well as the approving agent (FDA) regarding the safety of the product.
Question 3
Strict product liability is a concept different from breach of warranty. Strict product liability as a legal rule requires the seller, manufacturer or distributor of a faulty product to be liable to the person injured as a result of using the product, and this is regardless of if the defendant took all precautions to averse the defect. On the other side, breach of warranty entails the failure of a seller to live up to the terms of the promise, representation or claim made about the type or quality of the product. It is in the assumption of the law that the seller has in place warranties about the sold goods, and as such, he or she is expected to live by the assertions.
Question 4
The approval of a particular drug by the FDA (like the anti-depressant in Peter’s case) is potentially capable of bringing a state law product liability. In the case of Peter, such approval is adequate for the success of the lawsuit filed by Peter’s parents. The approval has the effect of a warranty since it promises the consumer that the product is of recommended quality. It is this assurance that would hold the drug manufacturer liable for the injuries or losses emanating from the use of their product.
Problem 4
Question A1
Investors who purchase pension payment by retirees take on various risks when they buy the pensions. First, the investors risk losing their money in the event the retiree does not live longer than expected; hence they end up losing their investment in the purchased pension. This risk can be addressed by ensuring that there is a background check in terms of health and general well-being of the retiree before purchasing the pension. Besides, the investor can mitigate the risks by entering into a contractual agreement that will guarantee continuous receiving of pension.
Question A2
Retirees on the other hand also take risks when they sell the rights to the pension payments. First, their income is not guaranteed in the case of receiving lump sum amounts of money. Besides, in case the stock market falls, or when they make bad investment decisions, chances of losing their money becomes high. Similarly, after receiving the lump sum, some retirees tend to live longer than expected. In this case, they end up using the money acquired after selling their pension payment; hence the risk is realized as the retiree has no other source of money. The retiree can run out of money in case they live longer than expected.
Question B 1
The case of the boutique investment firm to purchase the right to all some of the retiree pensions can be argued against on the basis of a violation of public policy. The case presented is similar to the Baby M case in that both involve the exchange of rights to ownership. In this case, the firm intends to purchase the right of pension payments. In the modern world, the demand for lump-sum payments by retirees is growing, and thus there are issues to do with public policy concerns. Since federal statutes and laws in my state are against this assignment of wages and social security payments, there is a similarity between this case and that of Baby M. The findings of the court of New Jersey concluded that no contract could change the legal position or ownership of a woman who bears an infant. In this case, the possibilities of reproduction by third parties raised many social and legal questions, just the way the buyout of pensions is against public policy.
Question B 2
One factor that makes this case different from Baby M is that retirees are adults who are in a position to make sound and informed decisions. Therefore, the issue of free will should factor in since it is stated that the retirees opt to sell their pension for reasons well known to them.
Question B 3
Considering Baby M case, the court can approach this case on the basis of legality and social factors. It should ascertain the social acceptance of the issue of assigning wages and social security payments. Besides, the court can base this case on legal grounds, i.e., assess if there is a mutual agreement between the investor and the retiree, and if such a covenant exists, then the issue can be considered legal.
Question B 4
One argument in favor of these contracts is that the involved parties are adults who make sound decisions regarding how to use their pensions. On the other side, there is the argument that such aging individuals would lead to a social problem in case the lump sum received gets depleted after a short period.
Question B 5
In my opinion, the court should set aside the preference of people to sell their pensions. Considering the tough economic times, individuals should be let free to decide on how to utilize their pensions. The issue of violation of public policy should not factor in when retirees intend to sell their pensions. In Baby M case, the court did so since there was consideration of the benefit of counseling and guidance, making the decision voluntary. The issues in this case, in my opinion, does not justify overturning the preferences of people.
Question B 6
I think the court would rule against selling pensions. The court is likely to cite a violation of public policy, hence prohibit the move.
Work Cited
Clarkson, Kenneth W, Roger LeRoy Miller and Frank B Cross. Business law: text and cases: legal, ethical, global, and corporate environment. Mason, OH: South-Western Cengage Learning, 2012.
