Business Law & Ethics

MBA 6070

Homework: Chapter 4 – ADR and Chapters 9 and 10 – The Law of Contracts

On a separate piece of paper, please answer the following four questions. Please note that I am more interested in your analysis than I am your conclusion. Specifically, I am looking for you to identify the issue, identify and discuss the rule of law and then applying the facts of the case to the rule of law to reach a conclusion. More weight will be given your argument supporting your conclusion than to the conclusion itself.

1. After Smith had been employed by HAL, HAL announced that the continued employment with HAL was dependent upon agreement to arbitrate all future employment disputes through the new Employee Dispute Resolution (EDR) program. A document was given to all employees explaining the program and containing the statement “continuing employment with HAL means that you agree to resolve employment related claims against the company through this process.” When Smith was fired two years after this document was distributed, she sued HAL for violating her leave rights under the Family and Medical Leave Act. HAL filed a motion to compel arbitration. Should this motion be granted or denied? Why?

2. William West, an engineer, worked for Big Corporation (BC), an organization of about 160 engineering and construction companies, which is headquartered in San Francisco, California, and operates worldwide. Except for a two-month period in 1985, BC employed West on long-term assignments or short-term projects for 30 years. In October 1997, West was offered in writing, and West accepted, a two-year contract for a position on a project with BC in Saudi Arabia. In November, however, West was terminated. After his return to California, West received numerous offers from BC for work that suited his abilities and met his salary expectations, but he did not accept any of them and did not look for other work. Three months later, he filed a suit in a California state court against BC, alleging in part breach of contract and seeking the salary he would have earned during the two years with BC. What are the best arguments that each side should make in this case?

3. William Story promised his nephew that he would pay him $ 5,000 if he gave up using tobacco, swearing, and playing cards and billiards until he was 21, which Story reduced to writing. The nephew did so and asked his uncle for the money. His uncle agreed to pay but died before he did so. The uncle’s estate refused to pay, arguing that there was no consideration for the uncle’s promise. Should the court uphold the agreement in this case? Why or why not?

4. On April 15, Williams Technical (WT) contracted to install an X-ray unit for Columbus City Hospital (CCH). The contract price was $55,000. The agreement contained a provision stating that the WT would deduct $1,000 a day from the contract price for each day the X-ray unit was not completed after August 15. It was not completed until September 15. WT refused to deduct $30,000 from the contract price. CCH refused to pay more than $25,000. WT sued, claiming the $1,000 a day was a penalty clause, not a liquidated damages clause. What was the result? Explain.