Read the following scenario and answer the question in 5–10 sentences. Fred and Frank have been operating a seasonal outdoor maintenance and landscaping business for the last three years under the name F & F Maintenance. There was no written partnership agreement. During the nonoperational winter months, Fred spends his time in Costa Rica, while Frank stays in town. In January, Frank was approached by an existing customer with a request that F & F build and install a bleacher stadium and football field for the local middle school. Frank advised the customer that, while he had no direct experience with this type of project, he was sure that he could subcontract any work that was needed. Neither Frank nor Fred had any previous experience as a general contractor. Experience aside, Frank signed a contract to complete the project for $200,000, taking a down payment of $50,000 with the remaining amount to be paid after passing inspection. At the inspection, the inspector determined that the bleachers had been built with unapproved materials. Therefore, to pass inspection, the entire bleachers would have to be rebuilt. The project would be a significant loss to F & F, even if the customer paid the remaining $150,000. The customer is refusing to pay any amount on the balance. Fred returned to town, became aware of what all had transpired, and is claiming zero responsibility for this mess. What is Fred's best argument to get off the hook?

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Read the following scenario and answer the question in 5–10 sentences. Fred and Frank have been operating a seasonal outdoor maintenance and landscaping business for the last three years under the name F & F Maintenance. There was no written partnership agreement. During the nonoperational winter months, Fred spends his time in Costa Rica, while Frank stays in town. In January, Frank was approached by an existing customer with a request that F & F build and install a bleacher stadium and football field for the local middle school. Frank advised the customer that, while he had no direct experience with this type of project, he was sure that he could subcontract any work that was needed. Neither Frank nor Fred had any previous experience as a general contractor. Experience aside, Frank signed a contract to complete the project for $200,000, taking a down payment of $50,000 with the remaining amount to be paid after passing inspection. At the inspection, the inspector determined that the bleachers had been built with unapproved materials. Therefore, to pass inspection, the entire bleachers would have to be rebuilt. The project would be a significant loss to F & F, even if the customer paid the remaining $150,000. The customer is refusing to pay any amount on the balance. Fred returned to town, became aware of what all had transpired, and is claiming zero responsibility for this mess. What is Fred's best argument to get off the hook?

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