Fundamentals Of Business Law (LAW 1101)

Legality, Covenants Not to Compete

Ad and Bookem, an accounting firm operating nationally over a long period of years, with branch offices in all major cities and coverage of all major industrial areas in the United States, acquired the entire practice and goodwill of Sub and Div. another accounting firm operating nationally, with branch offices in all major cities. The price was to be paid in ten annual installments. The agreement contained a provision that provided that the five major partners of Sub and Div, both individually and as members of the accounting firm, were not to engage in practice anywhere in the United States for three years. (a) Is the provision enforceable? Explain. (b) Assuming the provision is enforceable, what remedies does Ad and Bookem have against any of the partners who breach the contract provision? Explain.

Ad and Bookem, an accounting firm operating nationally over a long period of years, with branch offices in all major cities and coverage of all major industrial areas in the United States, acquired the entire practice and goodwill of Sub and Div. another accounting firm operating nationally, with branch offices in all major cities. The price was to be paid in ten annual installments. The agreement contained a provision that provided that the five major partners of Sub and Div, both individually and as members of the accounting firm, were not to engage in practice anywhere in the United States for three years. (a) Is the provision enforceable? Explain. (b) Assuming the provision is enforceable, what remedies does Ad and Bookem have against any of the partners who breach the contract provision? Explain.

Ad and Bookem, an accounting firm operating nationally over a long period of years, with branch offices in all major cities and coverage of all major industrial areas in the United States, acquired the entire practice and goodwill of Sub and Div. another accounting firm operating nationally, with branch offices in all major cities. The price was to be paid in ten annual installments. The agreement contained a provision that provided that the five major partners of Sub and Div, both individually and as members of the accounting firm, were not to engage in practice anywhere in the United States for three years. (a) Is the provision enforceable? Explain. (b) Assuming the provision is enforceable, what remedies does Ad and Bookem have against any of the partners who breach the contract provision? Explain.

6a. On December 1st, Kim and Kendall enter into an oral agreement under which Kim agrees to sell her house to Kendall for $2,000,000. They agree to a January 15 closing date. On December 2nd, Kendall makes a down payment of $200,000, which Kim accepts. On December 12th, Kim informs Kendall that she has changed her mind and is no longer interested in selling her house. Kim offers to return the $200,000 down payment. 

Kendall sues Kim for breach of contract. Kim pleads the Statute of Frauds as a defense, stating that the agreement had to be in writing to be enforceable.  What judgment? Explain fully.

6b. Also on December 1st, Kim and Kylie enter into an oral agreement under which Kim agrees to sell her two cars to Kylie for $100,000 each. Kim agrees to deliver the cars to Kylie on December 15th. On December 2nd, Kylie pays Kim a 50% down payment, which Kim accepts. On December 12th, Kim informs Kylie that she has changed her mind and is no longer interested in selling her cars. Kim offers to return the down payment to Kylie.

Kylie sues Kim for breach of contract. If Kim pleads the Statute of Frauds as a defense, judgment for whom?  Explain fully. 

7.     For almost a whole week, Stephen and Reed negotiated over the sale of Reed’s car from Reed to Stephen. Finally, in the presence of witnesses, Reed said, “All right. I’ll sell you my motorcycle for $5,000.” Stephen knew that Reed loved his motorcycle and is shocked that he is selling it, but when Reed said motorcycle, Stephen quickly accepted, planning to buy the motorcycle. Both the car and the motorcycle are worth about $5,000 each.

Do Stephen and Reed have a contract here? If so, is it for a car or a motorcycle?

1.     On May 1st, Estelle, a woodworker, sent a signed letter to Antonio, who operates a kids’ bedding store that read “I offer to build you a child’s bunk bed for $500. This is a “firm” offer and I promise not to revoke it for four months from today. (signed) Estelle.”  Antonio received the letter on May 5th.  On August 30, Estelle decided that she did not want to build the bed after all, so she sent a letter on that day to Antonio that read, “Hi Antonio: I am terribly sorry, but I have to revoke the May 1st offer to build the bunkbed. (signed) Estelle.”  Antonio received the letter on September 2nd.  On September 3rd, Antonio sent a letter to Nicole saying, “I accept your original offer of May 1st. (signed) Antonio.”  Estelle received the letter on September 8th.  Estelle refused to build and deliver the bed to Antonio.  Antonio then sued Estelle for breach of contract.

a.     Judgment for whom?  Explain.

b.    Assume that Estelle made the offer by telephone and not in writing.  Judgment for whom? Explain.