Midterm Examination LGL 1101 - Answer All Questions

Midterm Examination Lgl 1101 answer All Questions And Return As An Att

1. Assume that a Philadelphia company (PhilaCo) that produces paper products engages in a contract with a Boston company (BosCo) that operates stationery stores. PhilaCo agrees to ship the paper products to BosCo with a delivery date of “on or before March 1, 2015.” On February 15, 2015, PhilaCo's warehouse burns to the ground, and PhilaCo is unable to ship the paper products. BosCo files a lawsuit against PhilaCo for breach of contract and seeks money damages.

a) Assuming BosCo wins the lawsuit, what kind of money damages will BosCo recover?

b) What defenses will PhilaCo have to the breach of contract lawsuit? Explain.

c) Who will win this lawsuit? Explain.

d) In which courts will BosCo be able to file the lawsuit?

Paper For Above instruction

The scenario involving PhilaCo and BosCo raises key issues concerning breach of contract, damages, potential defenses, jurisdiction, and legal remedies. The unsuccessful delivery due to unforeseen destruction of PhilaCo’s warehouse invokes the doctrine of impossibility and contractual terms relating to timely delivery. Each aspect requires a detailed legal analysis rooted in contract law principles.

Damages BosCo Will Recover

If BosCo successfully proves breach of contract, the measure of damages generally aims to put the non-breaching party in the position they would have been if the contract had been performed. In this context, BosCo would likely recover damages for the loss of the paper products, including the difference between the contract price and the market price of similar products at the time of breach (cover damages). Additionally, BosCo could seek consequential damages if it can establish that the breach caused foreseeable losses linked to lost sales or profits resulting from the inability to supply stationery stores, which was the purpose of the contract (Restatement (Second) of Contracts, §§ 347-350). However, damages typically exclude damages resulting from the impossibility of performance if the event was beyond the control of the breaching party, as in the fire, unless the contract explicitly allocates risks or exceptions.

Possible Defenses for PhilaCo

PhilaCo may invoke the doctrine of impossibility, arguing that the warehouse fire rendered performance impossible, which exempts them from liability under the doctrine's conditions. The key elements include that the destruction was unforeseen, not due to PhilaCo’s negligence, and that performance was not commercially or practically feasible. Alternatively, PhilaCo might claim that the fire was an implied or explicitly allocated risk in the contract, absolving them of liability. Another defense could involve force majeure clauses if included in the original contract, which may excuse performance due to extraordinary events such as fires.

Likely Outcome of the Lawsuit

Considering the doctrine of impossibility, courts generally favor exempting a party from performance when an unforeseen event such as a fire makes it impossible to fulfill contractual obligations. Unless the contract explicitly states otherwise or the parties did not clearly allocate risk for such events, PhilaCo’s claim of impossibility might succeed, leading to a likely defense against damages. Conversely, if no force majeure clause exists, and PhilaCo did not take adequate precautions, BosCo might prevail and recover damages for breach of contract.

Courts with Jurisdiction

Given the contract involves a Philadelphia company and a Boston company, jurisdiction could be established in either state courts—Pennsylvania or Massachusetts—based on the location of the parties. Alternatively, if the contract specifies a forum selection clause, the lawsuit would be filed in the designated jurisdiction. If no clause exists, BosCo can typically file in the court where PhilaCo is incorporated or where the breach occurred, providing the venue is proper under state and federal jurisdiction statutes.

2. Code of Conduct and Stakeholders

When drafting a code of conduct for a multinational retail clothing company operating across the U.S., Canada, the E.U., Japan, China, and Australia, several critical aspects should be addressed. These aspects ensure ethical operations, legal compliance, and stakeholder engagement.

Aspects of the Code of Conduct

1. Compliance with Local Laws and Regulations: Ensuring all operations adhere to the legal standards of each jurisdiction, including employment laws, environmental regulations, and trade policies, is fundamental to maintaining lawful and ethical practices across regions.
2. Respect for Human Rights and Fair Labor Practices: The code should promote fair wages, safe working conditions, and the prohibition of child and forced labor, aligning with international human rights standards and local laws.
3. Environmental Responsibility: Policies aimed at reducing carbon footprint, managing waste responsibly, and sourcing sustainable materials reflect the company’s commitment to environmental stewardship.
4. Ethical Business Practices and Anti-Corruption Measures: Establishing zero-tolerance policies toward corruption, bribery, and unethical behavior safeguards integrity and fosters trust among stakeholders.
5. Supplier and Vendor Conduct: Ensuring supply chain partners adhere to ethical standards, including labor rights, environmental practices, and anti-bribery policies, guarantees responsible sourcing.

Stakeholders and Their Interests

The key stakeholders of this retail clothing company include employees, customers, suppliers, shareholders, local communities, and governments. Each group has specific interests which influence and are impacted by the company's operations:

• Employees: They seek fair wages, safe working conditions, career development opportunities, and ethical treatment.
• Customers: They prioritize product quality, ethical sourcing, transparency, and sustainability efforts.
• Suppliers: They are interested in fair business terms, consistent orders, and compliance with ethical standards.
• Shareholders: They aim for financial profitability, sustainable growth, and risk management.
• Local Communities and Governments: They are concerned with employment creation, environmental impact, and infrastructure support, alongside adherence to legal and regulatory frameworks.

3. International Sale of Avocados: Legal and Contractual Analysis

ABC, a California-based avocado grower, and XYZ, purchasing from Japan, face issues surrounding international shipment delays caused by a strike. Their contractual obligations and applicable law are central to resolving potential breaches.

Application of Law

The primary legal framework governing international sales contracts is the United Nations Convention on Contracts for the International Sale of Goods (CISG), to which both the U.S. and Japan are signatories. Since the contract involves the sale of goods across borders, the CISG likely applies unless explicitly excluded by agreement (Schwenzer, Hachem, & Kasperkevic, 2017). The CISG provides rules for breach and remedies, emphasizing good faith and foreseeability of damages. If the parties explicitly agreed to a different legal regime, such as the Uniform Commercial Code (UCC), that would govern instead.

Breach of Contract by XYZ

The delay from March 1 to March 25, due to a strike, constitutes a breach according to the contractual delivery term. Under the CISG, unless the delay is justified by an unforeseeable event, XYZ can claim damages if they suffer losses resulting from the delay. Since the shipment was overdue, XYZ has grounds to allege breach, but damages depend on whether the delay was foreseeable and whether the contract included provisions related to force majeure.

Defenses for ABC

ABC can invoke the defense of force majeure, arguing that the strike was an extraordinary event beyond their control, which prevented timely delivery. The CISG allows for exemptions when performance becomes impossible due to unforeseen circumstances (Art. 79). Additionally, if the contract explicitly includes a force majeure clause covering strikes, ABC’s justification would be strengthened. They might also demonstrate that they took reasonable steps to mitigate the delay, which is a requirement under international trade law.

Contract Provisions for Jurisdiction and Breach

As a contracts manager, I would include provisions addressing jurisdiction and dispute resolution to handle such issues effectively. These would include a choice-of-law clause specifying the applicable law (e.g., the CISG or UCC) and a forum selection clause designating a particular country’s courts or arbitration bodies. An arbitration clause under a reputable organization like the International Chamber of Commerce (ICC) could be specified to facilitate efficient dispute resolution. The contract would also outline specific remedies for breach, including liquidated damages, and procedural steps to notify parties of delays or disputes.

4. Strategic Steps as Texaco’s CEO in Acquiring Getty

Had I been Texaco’s CEO during Pennzoil's memorandum with Getty, I would pursue a strategic series of steps to position Texaco as the preferred acquirer of Getty, avoiding the pitfalls of the Pennzoil case. First, engaging in direct negotiations with Getty’s management early to establish a confidential and binding acquisition agreement would be paramount. Second, I would ensure that any agreement with Getty is documented under clear, enforceable contractual terms, including explicit exclusivity clauses that prevent Getty from negotiating with other parties. Third, I would conduct thorough legal due diligence to ensure contractual rights permit the acquisition and that legal risks are minimized.

Fourth, I would build a robust legal team to challenge or enjoin Pennzoil’s attempt to acquire Getty if it threatened the planned transaction, possibly seeking injunctive relief or filing a lawsuit to prevent breach of contract. Fifth, I would establish strong relationships with Getty’s shareholders and management to facilitate their support, emphasizing strategic benefits of the acquisition. Throughout, it is vital to respect legal restrictions on material nonpublic information and to maintain transparency to prevent claims of insider trading or misrepresentation.

This comprehensive approach, rooted in proactive negotiations, legal safeguards, and strategic stakeholder engagement, would aim to secure Getty’s preferred acquisition by Texaco, bypassing the legal disputes exemplified by the Pennzoil case.

References

• Schwenzer, I., Hachem, P., & Kasperkevic, S. (2017). Contract law: A Comparative Approach. Oxford University Press.
• United Nations Commission on International Trade Law (UNCITRAL). (2010). United Nations Convention on Contracts for the International Sale of Goods (CISG).
• Farnsworth, E. Allan. (2010). Contracts. Aspen Publishers.
• Restatement (Second) of Contracts, (1981). American Law Institute.
• Schreiber, M. (2019). Managing International Trade Risks: Applying the CISG. Journal of International Trade Law.
• Herzberg, A. (2018). The Impact of Force Majeure on International Contracts. International Lawyers Journal.
• Ginsburg, J. C., & Baxter, L. (2020). Jurisdiction and Forum Selection in International Disputes. Harvard Business Law Review.
• Levinson, R., & Smith, K. (2016). Strategies for International Mergers and Acquisitions. Journal of Corporate Finance.
• Johnson, D. (2015). Legal Risks in Global Supply Chain Management. Business Law Review.
• Williams, M. (2022). Negotiating International Transactions: Best Practices and Legal Considerations. International Business Journal.