Business Law
\nBUS2010
\n\u2018SIDNEY & NANCY\u2019
\nInstructions:
\n1. This assignment is to be completed in groups of 3-5 students. Each group is required to
\nwork independently from the other groups and to submit only its own work.
\n2. Read the attached case and answer the questions that follow. Marks for each question are
\nas stated.
\n3. Answers must be word-processed. Spelling, punctuation, and grammar count and will be
\nmarked. Include a cover page with case title, course and section number, my name, the date and
\nthe names (and section numbers) of the members in group.
\n4. It is a requirement of this course that every group member actively
\ncontribute to this group project. Students who contribute nothing or very
\nlittle to the group effort should expect to receive a mark of zero on the
\nproject. Students who contribute only a minimal amount to the group
\nshould expect to receive a maximum mark of 55%. Such a determination is
\nat the sole discretion of the instructor.
\n5. The best answers will demonstrate that the group has preformed research beyond the text
\nbook and class handouts where necessary.
\n6. This assignment is to be done in two parts. Part one is worth 10% of the course mark. Part
\ntwo is worth 15% of the course mark.
\n7. The answers will be submitted both electronically through eConestoga and in hard copy to
\nthe office of the instructor on or before the due date. Any submission that shows an inordinate
\nsimilarity to another document may be given a 0 and may be considered plagiarism.
\n8. Each group will also complete a Student Contribution Report for each part of the
\nassignment and submit it when the assignment is handed in. Each member of the group must
\nparticipate in the preparation of the report and sign the second page of the document.
\nDue date: See Instructional Plan
\n2
\nTHE CASE
\nSidney Greenwood and Nancy Fitzgerald had worked for National Business Systems, an
\ninternational computer repair service, for ten years. It therefore came as a surprise when they
\nboth received lay-off notices on a Friday afternoon late in December 2010. Both were given
\nseverance packages that matched their seniority so they decided that this might be the catalyst to
\nlaunch their own business repairing computers and related equipment for businesses in their
\ncommunity. Both were single, so no one else would be affected if the business failed. Sidney
\nhad graduated from a community college with a diploma in computer technology while Nancy
\nhad left high school after grade twelve, having taken several business courses prior to graduating.
\nThey decided to establish a partnership and to call their firm Compact Business Systems, closely
\nmimicking a large successful firm in another city called Compaq Business Systems. Since they
\nhad no plans to expand their business beyond their own community, they did not believe that the
\nsimilarity in names would pose a problem. In fact, Sidney and Nancy so admired the colours
\nused in the Compaq Business Systems\u2019 logo that they used similar gradient tones of red on all
\ntheir signage and advertisements. Sidney and Nancy also named their premium same day
\nservice: \u201cPresidio Service\u201d (a name similar to, but not exactly the same as, one already
\ntrademarked by Compaq Business Systems) and this became their most popular standard of
\nservice outselling their three day \u201cInvest Service\u201d by a margin of two to one.
\nSidney and Nancy gave no thought to the non-competition clause they had signed with National
\nwhen they were hired. All employees of National were required to sign a non-competition
\ncovenant stipulating that they would not work for a competitor or start up a competitive business
\nwithin three years after leaving National Business Systems. There was no geographic restriction
\ncontained in the non-competition clause, as National Business Systems had customers all over
\nthe world.
\nIn considering their start up costs, the pair determined that they would need a small shop to
\nconduct their business from, some testing and repair-equipment, a modest inventory of electronic
\ncomponents and a delivery van to pick-up and return equipment they would repair. They would
\nalso need to do some advertising in the local newspaper to get their name in front of the public.
\nPooling their resources they found they had a shortfall in start-up capital of some $50,000.
\nBecause neither Sidney nor Nancy owned a home or had any appreciable assets, the bank would
\nnot lend them the money without a guarantor. Nancy\u2019s uncle Fred was fairly well established
\nand agreed to sign a continuing guarantee for the necessary funds, insisting that \u201cthis was as
\nmuch as he was prepared to \u2018be on the hook for\u2019, so they better make do.\u201d This limitation
\nhowever, was not written into the agreement with the bank, nor was the bank made aware of it.
\nCompact Business Systems opened for business on March 1, 2011. In the first couple of months
\nafter start-up the business was going extremely well. On April 15, 2011, one of Compact\u2019s
\ncustomers – Lucky Accounting \u2013 delivered one of its (Lucky\u2019s) desktop HQ computers to
\n3
\nCompact. Compact was asked to upgrade the computer and install a new operating system
\nknown as Vulnerable. When Lucky\u2019s employee returned to Compact on April 21st to pick up the
\nHQ computer, Compact informed the Lucky employee that he was out of luck because the HQ
\ncomputer had been stolen in a break-in the night before. Neither Compact nor Lucky had any
\ninsurance coverage on the HQ computer. Compact had installed surveillance cameras in the
\nstore and there was a sign on the door identifying an alarm company. In order to save money,
\nhowever, Compact had stopped paying for the alarm monitoring and the surveillance cameras
\nwere just dummies. Compact\u2019s desk clerk calmly explained to the Lucky employee that the loss
\nwas not Compact\u2019s fault. The Lucky employee became very angry but she was not able to obtain
\nany satisfaction from Compact.
\nWhen Compact upgraded computers, this often involved not only changing the hardware but also
\nadding additional software. Shawna, a mature looking17 year old high school student, brought
\nher computer into Compact\u2019s. Shawna\u2019s computer had not being working well lately and she
\nhad absolutely no idea why that was the case. Compact\u2019s desk clerk advised Shawn that the only
\nway to improve the computer would be for her to purchase Compact\u2019s Deluxe Upgrade Package
\nfor $750.00. Shawna, under the urging of the desk clerk, agreed and signed the work order.
\nShawna picked up her computer a few days later. Once she had her computer at home it worked
\nperfectly. When her parents returned home and found out how much she had spent to repair the
\ncomputer her mother called a friend in the computer repair field who advised her that the repairs
\nshould have cost no more than $200.
\nAbout a week after Shawna had visited the store, Nancy, who happened to be working at the
\ncounter, spotted a customer behaving strangely. Upon closer observation she saw him slip some
\nsmall computer components into his pocket and move towards the exit. Nancy got another clerk
\nwho was in the back working on some computers and, after the customer had left the store,
\nNancy and the clerk approached him and demanded that he empty his pockets. The customer
\nrefused and Nancy demanded that he come back into the store while she called the police.
\nIntimidated by the other clerk (whose nickname was \u201cMoose\u201d) and believing that he had no
\nchoice but to comply he accompanied them into the store. He was placed in the break room and
\nthe door was closed. He waited until the police arrived and was subsequently arrested and
\ncharged with theft.
\nLater that day a long term customer, known to his friends as \u201cShady,\u201d brought his computer to
\nCompact. Shady had heard that Compact would install software (named FreeFromITunes),
\ncreated by a company called Sketchysoft, which would allow Shady to download music and
\nmovies from itunes.com without payment. Compact installed this software and Shady paid the
\n$400.00 fee. When Shady got his computer home he realized that FreeFromITunes did not work
\nat all and, in fact, resulted in Shady being charged double for each download.
\nSidney and Nancy called on several of National Business Systems customers and persuaded
\nseveral to switch their business with offers of reduced service charges and faster turn-around.
\nSidney and Nancy were particularly proud that they were able to persuade the regional office of
\nInternational Tire Inc. to bring all their computer repair work to Compact. International Tire
\n4
\nInc., who was National Business Systems largest customer, was in the 3rd year of a 5 year service
\ncontract with National Business. Nancy was also quick to point out to those she called on that
\nshe had long suspected National Business Systems of overcharging its bigger customers and
\nusing off-shore components of inferior quality in their repairs. Needless to say, many of
\nNational\u2019s customers were eager to switch their business in favour of the lower prices offered by
\nCompact.
\nOn June 1, 2011, Compact Business Systems signed a three year agreement with International
\nTire Inc. Terms of the contract included the requirement that Compact would repair all of
\nInternational Tire\u2019s computers in a timely manner and that International would send all of its
\ncomputer repairs to Compact during the 3 year period. The contract was signed by the President
\nof International Tire (on behalf of International Tire Inc.) and by Sidney Greenwood. Another
\nterm of the contract required Compact to pick up, repair and return the computers within an
\n\u201caverage time of approximately 4 business days.\u201d
\nSid and Nancy were fortunate to get a large contract from another tire manufacture \u2013 American
\nTire Corporation \u2013 based in Nova Scotia. This contract was fixed price contract. Sid and Nancy
\nnegotiate a deal that would pay $100,000 per year for 4 years for keeping ATC\u2019s computers
\nworking in tip top shape. The contract contained Sid and Nancy\u2019s cost exposure because ATC\u2019s
\nability to utilize their services was limited to having Sid and Nancy repair or upgrade a
\nmaximum of 1300 computers a year. A contract covering this work was executed by both
\nparties. A few days after the contract was signed, Nancy notice that the contract stated that the
\nannual payment would be $10,000 per year.
\nAround Thanksgiving 2011, things started to go wrong. Nancy, who had agreed to take care of
\nthe administrative end of the business, had fallen behind in paying the firm\u2019s bills and several
\nsuppliers were becoming impatient. At the same time, payments were not coming in from their
\ncustomers and Nancy was too busy to spend time chasing the delinquent accounts. Mainly as a
\nresult of this, cash flow was tight.
\nBy this time, Sidney and Nancy\u2019s business had paid $15,000 of the initial loan. The pair
\napproached the manager of the bank for an additional $40,000 in order to pay off the remainder
\nof the initial loan and have an additional $5,000 to get them through their \u2018tight spot\u2019. The bank
\nmanager agreed and provided the needed funds with all of Compact\u2019s business assets to be
\nsecured against the additional funds.
\nOne night a couple of weeks later, Sidney was delivering a computer to a customer on his way
\nhome from work and had an accident. A young woman in the other car, Freda Schmidt, was
\nseriously injured, suffering serious neck and back injuries. It was determined that Sidney had
\nmade an improper lane change and he was subsequently charged with dangerous operation of a
\nmotor vehicle. As it turned out, Freda was a highly paid administrative assistant and when her
\nboss learned she could be off work for at least three months, was going to sue for the loss of her
\nservices and the cost of replacing her on a temporary basis.
\n5
\nBy early November, the average time Compact took to repair a computer had slipped from 4
\nbusiness days to 7 or 8 business days. After several complaints from International to Compact,
\nInternational advised Compact that it was cancelling the contract because Compact had breached
\na condition of the contract. International Tire Inc. stopped sending its computers to Compact for
\nrepair.
\nIn addition, during the last two months of their first year, the economy went from bad to worse.
\nOrders dropped off, suppliers were screaming for payment in full on their overdue accounts, and
\nthe bank was threatening to seize the collateral posted as security for their loan. Sidney and
\nNancy decided that they had had enough and decided to declare bankruptcy. Believing that
\nuncle Fred was in the clear, it seemed like they had nothing to lose. The bank could \u2018go pound
\nsalt\u2019.
\nIn the week before the pair were to visit their lawyer to discuss the bankruptcy process, Sid and
\nNancy wrote cheques to three of their suppliers whom they felt had treated them well and who
\nthey did not want to leave holding the bag. They also arranged to sell off some unused inventory
\nto a discount warehouse for 30% of its original value. They pocketed the cash they received
\nfrom the sale, believing that they were entitled to it as compensation for all of their hard work.
\nIn early January 2012, they met with their lawyer to start bankruptcy proceedings. They
\ndisclosed their financial situation, including the most recent loan arrangement they had with the
\nbank. Although the lawyer only gave the initial loan agreement with the bank a cursory look, he
\nassured them the inventory was the only security the bank was entitled to. The delivery van,
\nwhich was leased, could be returned to the leasing company without any additional costs and
\nthey would simply abandon the lease for the building they were using as a workshop.
\nMeanwhile, the leasing company, having heard about Compact\u2019s troubles, decided to try and
\nrecover their van, fearing that bankruptcy proceedings could see it tied up for weeks once the
\ntrustee in bankruptcy put a lock on the firm\u2019s premises. They ordered their agents to break into
\nSidney & Nancy\u2019s shop late one night to recover the van. In doing so, the agents broke the
\npadlock on the door and, while moving through the dimly lit premises, one of the agents tripped
\nover an electric heater which ignited a puddle of solvent Nancy had spilled and failed to clean
\nup.
\nThe solvent ignited immediately causing a fire that quickly spread through the shop.
\nSerious damage was done to the shop and one of the agents sustained serious burns while putting
\nthe fire out. He was out of work for three months recovering from the injuries.
\n6
\nQUESTIONS FOR ANALYSIS
\nPART ONE (TOTAL 40 MARKS)
\n1. Is there a valid contract between Compact and International Tire Inc.? Explain
\nfully with specific reference to the key elements. (6 marks)
\n2. ASSUMING THAT THERE IS A VALID CONTRACT, was the contract
\nbreached? Which party (or parties) breached the contract? How specifically was
\nthe contract breached? At what point in time could legal action be started by each
\nparty that you have identified as breaching the contract? (8 marks)
\n3. How would the court approach the question of damages relating to the Compact
\nand International Tire Inc. contract? What factors would be considered? (8
\nmarks)
\n4. Is there a valid contract between Compact and American Tire Corporation? Will
\nCompact be able to successfully bill American Tire Corporation for $100,000 per
\nyear? What arguments can Compact bring forward? Will it be successful? (6
\nmarks)
\n5. Does Shawna have any action that she can take against Compact? What steps can
\nshe take (assuming her parents let her out of the house)? Will she be successful?
\nIn a court action, who would be the plaintiff and who would be the defendant? (8
\nmarks)
\n6. Can Shady successfully sue Compact in court for the return of his money based
\non the fact that the software did not work? Why, or why not? (4 marks)
\nPART TWO (TOTAL 46 MARKS)
\n1. Define \u201cPassing off” and describe how it is an issue in this case. Who is the defendant?
\nWho is the Plaintiff? What remedies would be available? What specific losses would be
\naddressed? (6 marks)
\n2. What is interference with contractual relations and how is it relevant in this case? Who is
\nthe plaintiff and who is the defendant? What are the facts that support a possible claim?
\n7
\nWhat remedies would be available in this situation? (6 marks)
\n3. Describe how defamation is an issue in this case. What specific form of defamation
\noccurred? Who is the plaintiff and who is the defendant? Which defenses, if any, would
\nbe available to Sidney and Nancy? What would be the most probable outcome (remedy)
\nand why. (6 marks)
\n4. Is the restrictive covenant (non-competition clause) that Sidney and Nancy signed with
\nNational one that would be enforced by the courts? Explain your answer thoroughly. (6
\nmarks)
\n5. Explain how trespass is an issue in this case from Compact\u2019s perspective? Who is the
\ntrespasser? If an action for trespass is commenced, who would be the plaintiff and who
\nwould be the defendant? What would be the most probable outcome (remedy) and why.
\n(6 marks)
\n6. Do the trespasser(s) that you identified in question 5 above have any action against
\nCompact? Who would be the plaintiff(s) and on what basis? Who would be the
\ndefendant(s)? Please explain your answer thoroughly. (6 marks)
\n7. Describe the steps taken by Sid and Nancy immediately prior to the bankruptcy that may
\nbe offences under the Bankruptcy and Insolvency Act. What is the legal term used to
\ndescribe each of these steps (events)? (4 marks)
\n8. Does Lucky Accounting have a potential cause of action against Compact? If so, what
\ntype of action (give its legal name) would Lucky pursue? Explain the cause of action and
\nwhether or not they might be successful. If Lucky was successful, what would be the
\nmost probable outcome (remedy) and why. (6 marks)<\/p>\n","protected":false},"excerpt":{"rendered":"
Business Law BUS2010 \u2018SIDNEY & NANCY\u2019 Instructions: 1. This assignment is to be completed in groups of 3-5 students. Each group is required to work independently from the other groups\u2026<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2754,2756,2757,2758,2749,2746,2745,2755,2768,2775,2752,111,2774,2751,2750,2753,2744,2747,2748,2769],"tags":[6885,7397,7395,6606,633,7399,630,7394,7402,7393,15,7398,6886,7396,7401,66,7400],"class_list":["post-51080","post","type-post","status-publish","format-standard","hentry","category-assignment-club","category-best-assignment-writer","category-brain-storm-essays","category-buy-nursing-essays","category-essay-geeks","category-essay-writing-service-australia","category-essay-writing-uk","category-ivory-research","category-masterra-essay","category-medical-assignment-help","category-native-assignment-help","category-nursing-essay-writing-service","category-nursing-paper-writing-service-nursing-answers","category-online-healthcare-assignment-help","category-ox-bridge-essays","category-uk-best-nursing-assignment-writing-service-for-students","category-uk-essays","category-uk-top-writers","category-uk-writings","category-words-doctorate","tag-best-custom-paper-writing-service","tag-best-online-paper-writing-service","tag-best-paper-writing-service","tag-best-research-paper-writing-services","tag-cheap-research-paper-writing-service","tag-cheapest-paper-writing-service","tag-college-paper-writing-service","tag-free-paper-writing-service","tag-free-term-paper-writing-service","tag-paper-writing-service","tag-paper-writing-service-reddit","tag-professional-paper-writing-service","tag-someone-to-write-my-paper","tag-websites-that-write-papers-for-you","tag-what-is-the-best-paper-writing-service","tag-write-my-paper","tag-write-my-paper-for-me-free"],"_links":{"self":[{"href":"https:\/\/www.essaybishops.com\/essays\/wp-json\/wp\/v2\/posts\/51080","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.essaybishops.com\/essays\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.essaybishops.com\/essays\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.essaybishops.com\/essays\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.essaybishops.com\/essays\/wp-json\/wp\/v2\/comments?post=51080"}],"version-history":[{"count":0,"href":"https:\/\/www.essaybishops.com\/essays\/wp-json\/wp\/v2\/posts\/51080\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.essaybishops.com\/essays\/wp-json\/wp\/v2\/media?parent=51080"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.essaybishops.com\/essays\/wp-json\/wp\/v2\/categories?post=51080"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.essaybishops.com\/essays\/wp-json\/wp\/v2\/tags?post=51080"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}