{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

MGT393H5F2004APR - UNIVERSITY OF TORONTO Faculty of Arts...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: UNIVERSITY OF TORONTO Faculty of Arts and Science /' UTM APRIIJMAY 2004 MGT 393 Ill/5 S Duration - 2 hours NO AIDS ARE ALLOWED FOR THIS EXAMINATION QUESTION ONE (65 marks) (78 minutes) Paul Smartin’, former leader of the Liberal Spending Party, and his long-time political colleague, fundraiser Alfonso Bag—the—ad—dough, were both employed as used car sales persons (or “pre-enjoyed vehicle transfer facilitators”, as they vigorously asserted to anyone who would listen) for Hot Off Our Dealership: Wonderful Inc. (“Hoodeinc.”). The sole shareholder and director of Hood:Winc. was another former politician (and former colleague of Paul and Alfonso), John Cretin. One morning, Janet Tacks—on, a minimalist clothing designer, came into the Hood:Winc. showroom saying that she was looking for a “hot sports car that kept abreast of the latest automotive innovations”. Paul showed Janet the new Mazda Rx!) Sports Coupe, which Paul described as a “prescription for success — this is exactly what you are looking for”. Because Janet was already late for a fashion show, she agreed to take the vehicle without even test—driving it. Paul handed Janet the sales contract, which she signed without reading it. Afier handing over a cheque for full payment of the purchase price, Paul handed Janet the keys and Janet roared off to her show. Shortly afterwards, someone walked into the showroom wearing a ski mask and said to Alfonso (in a somewhat high-pitched voice) that he was looking for “a rugged all-terrain vehicle for my Neverland Ranch”. Alfonso immediately exclaimed “I know who you are — you’re that famous musician with the fabulous skin complexion Michael Wax-on!”1 Alfonso received a smile in reSponse. Alfonso quickly Showed him the new Bummer B2 off—road SUV. After a short test-drive, Alfonso was told “I’ll take it”. Alfonso then produced a sales contract which was signed with an undecipherable signature. Alfonso was asked if the dealership would accept payment the following day. “You know I am good for it” Alfonso was told. Alfonso agreed, and handed over the keys. As the vehicle was being driven off the lot, Alfonso realized that he had forgotten to fill in the buyer’s name on the contract, so he wrote in “MICHAEL WAX—ON”. At the end of the day, Paul and Alfonso went to the local pub to celebrate their extraordinary day. In the pub, they were approached by Belinda Stomach, a former belly dancer who was raising money to help pay the legal costs incurred by Martha Toohult (former head of Martha Toohurt Polygamedia Inc.), who Belinda insisted was “wrongly convicted”. Feeling particularly generous, Paul and Alfonso both agreed to contribute $5,000 to this “worthy cause” and signed a pledge sheet that set out their names, addresses, and the amount they had pledged. Belinda then gave each of Paul and Alfonso a “Martha Victory” pin and thanked them profusely for their pledges. Things seemed to be going particularly well for Paul and Alfonso. But alas (what did you expect — this is a law exam) fortune seemed to stop smiling on them the following week. First, Janet’s cheque for the Mazda Rx9 sports coupe bounced. Then Paul received a letter from Janet Tacks-en’s lawyer threatening to sue Paul and Hood:winc. for “every penny they owned” as a result of a horrific car accident Janet was Page I of 3 in shortly after leaving the dealership. The letter stated that J anet’s new vehicle had experienced a complete brake failure because it was equipped with an older braking system that had been replaced last year by Mazda because of numerous failures. (As it turned out, Paul was aware of those failures but had no idea whether or not the particular vehicle sold to Janet had the older or newer braking system.) Then Alfonso was brought into John Cretin’s office to explain why he had not collected payment on the Bummer B2 that Alfonso had sold to “Michael Wax-on”. A flustered Alfonso stammered that the buyer had promised to pay in full the day after the sale. A subsequent police investigation uncovered that the purchaser was not Michael Wax-on but Michael Kleptomaniacson. When I-Ioodzwinc. learned about this, they demanded that Michael Kleptomaniacson return the vehicle, but Michael’s only response was “so sue me already”. Then things got even worse (“timing is everything”, as the saying goes). Because Hood:winc. did not receive payment for the Bummer B2, it was not able to meet its employee payroll or make its lease payments. It turned out that John (in his capacity as the sole director of Hood:winc.) had just declared and paid a very large dividend to himself (as the sole shareholder). If Hoodwinc. had received payment for the Bummer B2, and if Janet’s cheque had not bounced, then Hoodwinc. would have had enough money to cover the dividend as well as the payroll and lease payments. The last straw was the arrival of a letter from Belinda to Paul and Alfonso, demanding payment of the $5,000 pledges. In the letter, Belinda advised that on the strength of those pledges and several others, Martha had gone and hired a very expensive lawyer to handle the appeal of her conviction, and had already incurred “substantial” legal costs. A very shaken John, Paul and Alfonso decided to seek high-powered legal advice, and went to the highly renowned law firm Cassels Broke where they met with high—profile lawyer Rex Pulverizer. In the meeting, John, Paul and Alfonso provided Rex with a copy of Hood:Winc’s standard sales contract (the one that Janet had signed). That contract contained the following clause: 23. In no event will Hood:Winc be liable to the purchaser for any negligent acts or omissions of Hood:Wine or its employees. After the meeting, Rex has asked you, a junior lawyer in the firm, to provide Rex with an analysis of all of the legal issues arising out of the above facts. For each such issue, Rex has asked that you describe the legal principles used to address such iSSue, apply those principles to the issue and give a very brief indication of the likely outcome of that issue. REQUIRED: Provide the legal analysis requested by Rex. QUESTION TWO (35 marks) (42 minutes) On June 22, 2003, Best Meats Inc. (“BMI”) entered into an agreement with the rural accounting firm of Debit & Credit, LLP (“D&C LLP”) to supply a large volume of hamburger meat at a price of $1.40 per pound, for a large barbecue on September 7, 2003. The accounting firm was hosting the barbecue as a fundraiser in support of The United Whey, an association of dairy farmers of Ontario. At the time of entering the agreement, the price of meat was very low as a result of market conditions related to concerns about “Mad Cow Disease”. By mid August 2003, beef prices in Canada had increased significantly. On August 29, 2003, BMJ called Candice Beytrue, the receptionist for D&C LLP who had placed the hamburger meat order with BMl (on the instructions of one of the D&C LLP partners). BM] told Candice, “We are losing money here. If you do not agree to pay $2.50 per pound, we are not going to Page 2 of3. 9, provide any meat. Because Candice was in a panic that the event would have to be cancelled, she told the sales manager, “I suppose that we have to pay what we have to pay. Sounds like there is not much flexibility here. Let’s go ahead based on what you said.” The barbecue went ahead on Sunday September 7, 2003. Volunteer staff from D&C LLP cooked and served the hamburgers. The barbeque was well attended, and appeared to be a great success. However, subsequent to the barbecue, several individuals in attendance, including members of the local media, became very ill with food poisoning. The public health department has traced the cause of the food poisoning to the barbecued hamburgers and has suggested that the most likely cause was either the hamburger meat having been tainted or the hamburgers having been undercooked. The individuals that became ill each missed several weeks of work and suffered loss of income. As a group they have started a class action law suit against D&C LLP. Subsequent to the barbeque, BMl sent an invoice to D&C LLP for the hamburger meat at a price of $2.50 per pound. When D&C LLP refused to pay the invoice, BMI started a lawsuit against the firm for the full amount of the EMT invoice, plus legal and court costs. D&C LLP’s senior partner, Richard N. Yu, insists that the accounting firm should not be liable to pay BMI’s invoice because of the food poisoning and the fact that the firm was only acting on behalf of The United Whey (and therefore could not itself be liable for any of the invoiced amount). He also insists that the firm should not be liable to the individuals who suffered food poisoning because the firm had given its staff clear instructions on the proper way to cook the hamburgers (which instructions, if followed, would not have resulted in any undercooked hamburgers). REQUIRED: Prepare a memo that analyzes in detail the claim made by BMI and the nature of any defences] arguments that D&C LLP may have regarding this claim. In addition, analyze the lawsuit launched by the individuals that became ill after attending the barbecue. Your analysis should set out the basis of any claim, what will need to be preven, along with any possible defences and other issues/concerns you consider relevant. TOTAL MARKS: 100 END OF EXAMINATION Page 3 of 3 ...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern