Ace Heating and Cooling sells air conditioners. One unit, the Freezy, has a fair market value of $300. During a heat wave, Ace sells three Freezys for $1,000 to the following:
- Breanna, single mom with poor credit, who can’t afford to pay cash for an AC unit. Breanna signs a contract to pay $1,000 on a credit plan, with an additional $500 in interest and financing fees.
- Barry Bigshot, investment banker, who knows the price is way too high but who is far too important to waste his time driving around town trying to get a better deal.
- Glamour Café, a fancy restaurant with an upscale clientele, whose AC went out in the middle of the lunch rush. The manager is desperate to get the place cooled down before people like Barry Bigshot come in for the evening happy hour.
- Shady Rest Nursing Home, a business with a narrow profit margin. The manager isn’t happy about the price, but old people are very vulnerable to heat, and she’s afraid that her patients’ health could be compromised by any delay in getting AC.
Read the Ace Heating and Cooling scenario and answer the following questions:
- Under UCC 2-302, who has the best chance of getting out of the contract due to unconsionability?
- The symbol for justice features a woman wearing a blindfold illustrating that the law should be applied the same way regardless of who the parties are. Does the UCC rule seem to contradict this? Which approach do you think is more ethical?
- Note that both Glamour and Shady Rest are businesses, and courts rarely find that contracts between two businesses are unconscionable. The rationale is that a business is a sophisticated entity, familiar with transactions and able to protect itself. Do you think Glamour and Shady Rest are in a comparable position in regard to this contract? Why or why not?
Discussion 2
Karen is shopping at Big Mart. She has with her an umbrella which is the same brand Big Mart carries. When a Big Mart employee, Steve, sees her leave with the umbrella without going through the checkout lane, he asks her to come back into the store. Steve says that he thinks Karen is shoplifting the umbrella. Karen tells him that she has had the umbrella for years and shows him marks of wear and tear. Steve apologizes and tells Karen she is free to go. Can Karen successfully sue for false imprisonment or defamation? From what you have learned about the relationship between a principal and an agent, analyze whether Steve or Big Mart could be liable because of Steve’s actions.
Discussion 3
List two characteristics each of real, intellectual, and personal property. Do owners of real, intellectual, and personal property each have the same rights under the law? List how each type of property is treated under the law. Explain why it is in the best interest of society to treat these types of property the same or differently.
Discussion 4
Read the article Governance in the Spotlight: What the Sarbanes-Oxley Act Means for You. In this article the author outlines provisions companies are now required to implement. Consider the requirements imposed by Sarbanes-Oxley on corporate boards of directors. Do small businesses and privately held companies have ethical duties? If so, to whom would they owe this duty? Employees? Customers? Vendors? Should the law impose ethical requirements on small businesses or privately held companies or can the marketplace police unethical business behavior? Provide support to justify your position.
Discussion 5
Internet domain names are linked to trademark issues. Technology makes it easy to copy and distribute music and movies without paying royalties. Business conducted on the internet raise security and privacy issues. What legal concerns are raised by these issues? Predict which of these issues will be of major concern in the future in regard to the law and business practices.
Discussion 6
How do governments attempt to control foreign businesses operating within their borders? When U.S. companies do business in other countries, what issues do they face? Describe the responsibilities and ethical concerns that you feel are important for U.S. companies to consider when doing business in other countries
