The Legal Environment of Business: Text and Cases
9th Edition
ISBN: 9781305764460
Author: Frank B Cross/ Roger LeRoy Miller
Publisher: CENGAGE C
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Chapter 18, Problem 2BS
Summary Introduction
Case summary: Person W is the owner of company WC and is also a board of directors of the company WC. Company OC is negotiating with company WC for renovation of the headquarters. W previously disclosed about his personal interest in incorporating the construction company to two of the other directors. The company approves of the contract by three-to-two votes with W voting with majority.
To find: The extent to which the contract is binding on the corporation.
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Oxy Corp. is negotiating with Wick Construction Co. for the renovation of Oxy’s corporate headquarters. Wick, the owner of Wick Construction Co., is also one of the five members of Oxy’s board of directors. The contract terms are standard for this type of contract. Wick has previously informed two of the other directors of his interest in the construction company. Oxy’s board approves the contract by a three-to-two vote, with Wick voting with the majority.
Question: Should the contract between Oxy Corp and Wick Construction corp. be set aside or is it binding? What would have been the proper way for Wick to conduct himself at the Oxy board meeting?
Clay and Roan are negotiating the sale of Clay's car to Roan. Roan tells Clay he needs a little time to consider the last
offer Clay made. A week later, Roan emails Clay, "I accept your offer." Clay and Roan
a. have a valid contract because Clay did not specify the method of acceptance and accepting via email a
week later is reasonable.
b. do not have a valid contract because accepting a week later is an unreasonable lapse of time.
c. do not have a valid contract because accepting via email is an unreasonable manner of acceptance.
d. have a valid contract because they were in the middle of negotiations.
Palatka Costumes & Caps LLC ("PC & C") is a large props company formed in 1957, and Frodo Flags
Corporation is a small, local flag manufacturer formed in 2015. These two businesses never had any
dealings with each other until they recently entered into a contract, with terms all drafted by PC & C.
The contract provides that PC & C shall purchase 1,000 flags that Frodo Flags will specially design
for PC & C. The contract further provides that PC & C has the right to initiate, on a weekly basis,
purchase orders of up to 100 flags until the contract's total number of flag purchases - 1,000 flags
has been met. Also, the contract includes a clause stating that PC & C can cancel its obligation to
pay for the remaining flags at any time if any Frodo Flags shipment does not arrive on the exact day
as stated in a particular purchase order; this last provision is included in the contract even though
time was of little importance to PC & C.
W
The first shipment of 100 flags arrives a day late,…
Chapter 18 Solutions
The Legal Environment of Business: Text and Cases
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