Course Code Course Name Section Code
BU4003-G6 & G7 Business Law BUS IV – G6 & G7
Summer 2024 Type of Evaluation Percentage Weight of Total
Practical Assignment 2 Evaluation 15%
Course Instructor Due Date Total Marks: /15
Gus Lazopoulos Week 8 (June 30th, 2024)
Please answer the questions from the case study below based on what we
discussed in Chapter 1: Case 1 (5 Marks)
A major manufacturer of advanced electronic game play units agreed with an
equally large international retailer on certain terms for the production and
distribution of the newest such game units. It was agreed that the manufacturer
would provide the retailer with the first 1 million units to the exclusion of all other
retailers. The retailer would receive its units for an exclusive product launch week,
before any other units would be sold wholesale to other retailers. In turn, the
retailer agreed to sell the units at precisely $599.99, this price being ideal,
according to the manufacturer’s market research. Every purchaser would also
receive a T-shirt with the manufacturer’s logo and $20 in gift coupons for the retail
store.
If the business relationship later fell apart, which party could enforce which parts of
this agreement?
Could it be attacked by others?
Ans.1 In the scenario presented, the agreement between the manufacturer and the
merchant consists of several crucial points:
Exclusive provide Agreement: The producer commits to provide the store exclusively with
the first 1 million units.
Exclusive Launch Week: The store has the sole right to sell these units during a certain
launch week.
Set Price: The store agrees to sell the units for a fixed price of $599.99.
Promotional Items: Each purchase includes a T-shirt and $20 in gift certificates.
Enforceability: Provisions for exclusive supply and launch can be enforced by both the
manufacturer and retailer. The manufacturer may impose the retailer's exclusivity to
restrict them from distributing to other parties during the launch week. In contrast, the
retailer could enforce the manufacturer's agreement to distribute only to them.
Set Price: The manufacturer may enforce the retailer's promise to sell at a certain price as
a term of their contract. However, imposing a fixed resale price may face legal challenges
under antitrust or competition rules, as price fixing is considered anti-competitive.
Promotional Items: This phrase can be enforced by any party because it is part of the
sales plan agreement.
Potential challenges:
Antitrust and Competition Laws: Third parties (such as competing stores or regulatory
authorities) may challenge the arrangement on the basis that it violates anti-competitive
practices. Depending on the jurisdiction, price-fixing agreements and exclusive supply
contracts may constitute antitrust violations.
Consumer Protection regulations: If the fixed price and promotional components are found
to be deceptive or unfair to customers, they may be subject to consumer protection
regulations.
Conclusion:
Enforceability: While the provisions of the agreement are enforceable between the
manufacturer and the retailer, they may be limited by any antitrust or competition laws.
Challenges from Others: If it is determined that the agreement violates rules governing fair
competition and market practices, competitors or regulatory agencies may challenge it.
Case 2 (5 Marks)
Maria intended to open a store in a major mall. She invited Yasmin to join her
through investment and management of the operation. Yasmin agreed on the
condition that she could raise the money and work it into her schedule as an
assistant in an accounting firm. She did raise the money, and sent it to Maria, and
on the strength of that, Maria signed the shopping centre lease agreement. When
Yasmin’s employer discovered her plans, it informed her that “no moonlighting”
was a condition of her employment contract.
Discuss the implications of this for Maria and Yasmin.
In this situation, the consequences for Maria and Yasmin are as follows:
Yasmin has already invested and committed to the business venture by sending money to
Maria.
Employment Contract: Due to her employer's "no moonlighting" policy, she is unable to
legally run the store while working her current job. This creates a contradiction between
her investment in the store and her job responsibilities.
Options:
Negotiate with Employer: Yasmin could ask her employer for an exception or change her
role to allow her to participate in the business.
Find a Solution: She could explore reorganising her role in the store, such as becoming a
silent partner who does not oversee day-to-day operations.
Potential Breach of Employment Contract: If Yasmin continues in her managerial job, she
risks breaching her employment contract, which could result in termination.
Maria:
Maria signed the lease based on Yasmin's financial commitment and expected
management assistance.
Business Operations: Without Yasmin's involvement in management, Maria may need to
find another partner or change her business strategy.
Financial Implications: If Yasmin is unable to participate, Maria may have to repay the
money or renegotiate the terms of their agreement.
Legal and Business Considerations:
Partnership Agreement: Maria and Yasmin must formalise their partnership with clear
conditions for duties, obligations, and investment.
Financial arrangements: If Yasmin is unable to participate, they must decide whether her
money will be repaid or she will continue to be a silent partner.
Maria should develop alternative management measures in case Yasmin is unable to fulfil
her duties.
In conclusion, Maria and Yasmin should examine Yasmin's restrictions and reach an
agreement. Legal guidance may be useful when dealing with partnership agreements and
employment contract consequences.
Case 3 (5 Marks)
Megamalls Inc. is known for its ability to create “retail experiences” for customers
visiting any one of its six malls in major Canadian cities, with each mall being in the
80-120 store range. To further its reputation, Megamalls specially selects its
qualifying tenant stores for a very particular mix of goods and services it feels will
create the greatest customer draw. Moreover, it draws up tenant contracts to
ensure that retail offerings are in accordance with its wishes. Recently one chain of
stores with tenancies in each of the six Megamalls began changing its own retail
image by altering its line of goods and marketing tactics. Megamalls feels that this
is in contravention of the tenant contract.
What remedy or remedies should Megamalls seek and why?
Megamalls Inc. may seek the following remedies:
Remedy: Injunction.
Purpose: To restrict the tenant from changing its retail offers and marketing strategies.
Why: This would immediately prevent any further breaches of the tenant contract while
maintaining the intended shopping experience.
Specific Performance:
Purpose: To require the tenant to follow the conditions of the original contract regarding
the line of goods and marketing.
Why: It ensures that the tenant fulfils their contractual responsibilities in accordance with
Megamalls' vision.
Termination of lease:
The purpose is to terminate the tenant's lease if they refuse to comply.
Why: If the tenant continues to breach the contract, Megamalls may opt to replace them
with a tenant who aligns with its intended retail mix.
Damages:
Purpose: To recoup financial losses caused by the tenant's breach.
Why: To compensate for any negative impact on customer attraction or brand reputation
caused by tenant changes.
Considerations:
Megamalls must carefully evaluate the tenant contract to ensure that the terms governing
items and marketing strategies are properly established.
Before pursuing legal action, Megamalls may explore communicating with the renter to find
a mutually acceptable solution.
Legal Advice: Legal guidance is required to determine the most appropriate remedies
based on the contract and applicable legislation.
Conclusion: Megamalls should prioritise protecting their retail experience and contractual
obligations, while also considering immediate and long-term implications on reputation and
consumer happiness.
