Canadian Law and Business Administration
Problem 1
Ebenezer has sold Chlistmas trees for the past five years. Each year he had purchased the trees from Gloria Marley who had a small tree farm in Northern Ontario. In order to ensure that he would have an adequate supply, Ebenezer entered into a contract with Gloria on September 15 to purchase all of her available trees at a price of $30.00 per tree. The contract read as follows:
“Ebenezer agrees to purchase and Gloria agrees to sell all of her Christrnas trees (approximately 500) for $30.00 per tree. All trees are sold without warranty. Same terms as last year apply.”
On December l, Gloria cut the trees (which totalled 478), tagged them and placed them on the delivery truck. Orders were prepared directing the driver to make the delivery to Ebenezer. Gloria texted Ebenezer to advise that the trees were on the way.
Later that day the delivew truck slid off the road, resulting in the destruction of the trees.
Ebenezer purchased 500 “Douglas Pine” trees from another supplier at $40.00 per tree.
Subsequently Ebenezer received an invoice from Gloria for the full purchase price of $14,340.00.
Upon fulther investigation, he has also discovered that 100 of the trees that were shipped were “Scotch Pine” trees and the balance were “Douglas Pine” trees. Ebenezer’s profit on the sale of “Douglas Pine” trees is $40.00/tree as opposed to $30.00/tree for “Scotch Pine” trees. In the previous years Gloria had delivered only “Douglas Pine” trees.
Ebenezer refuses to pay and sues Gloria for breach of contract. Gloria counterclaims for the price of $14,340.00.
Explain the legal positions of Ebenezer and Gloria and the likely result. Be certain to cite all relevant legal plinciples including the relevant portions of the Sale of Goods Act.
Problem 2
Pat, Erica and Katharine have established separate advertising businesses. Pat and Erica operate as sole proprietorships. Katharine has incorporated a company, Katco Inc., to run her business.
Katharine was recently the successful bidder for the production of an adveltising campaign for Mickey Best’s Beer Inc. (“MBB”), a brewery started by sports legend Mickey Best. Since she did not have the resources to complete the campaign, she suggested to Pat and Erica that they complete the job together.
Pat, Erica and Katharine agreed that although the contract, as signed, was with Katco Inc., they would all contlibute equal amounts of capital, staff and time and divide the profits equally, subject to a commission fee of $50,000.00 which would be payable to Katco Inc. for arranging the
contract.
The campaign was successful with each of the parties earning $ 100,000.00.
On January 1, MBB told Katco Inc. that they would not be renewing the contract. In response to her inquiries N’IBB revealed that it has signed an agreement with Patco Ltd., a corporation recently formed by Pat, for advertising services for the next year at a price of $300,000.00.
Erica and Katharine come to you for advice and want to commence legal action agai_nst Patco Ltd. and Pat for all profits, and/or an injunction to prohibit Patco Ltd. from proceeding with the contract. Pat claims that since Patco Ltd. is a new corporation, any past dealings which Pat may have had with Erica or Katharine do not apply to Patco Ltd. and in any event that they were never pætners and therefore all clients were “up for grabs”.
Required: Advise Erica and Katharine whether they have any basis to commence an action against Patco Ltd. or Pat. Are Pat, Erica and Katharine (or Katco Inc.) partners? Be certain to explain the applicable principles as part of your answer. Would the situation be any different if Katharine (rather than Pat) was personally hired by the brewery as an in-house employee in charge of advertising? Why or why not?
Problem 3
Katharine and her family had brewed beer for years and, through a process of trial and enor, had come up with a number of unique recipes.
As part of the contract with N4BB, Katco Inc. was to work with MBB’s brewers to create and market a new light beer. Katco Inc. provided MBB’s brewers with the recipe for “Molly’s Great Draft”; a recipe originally created by Katharine’s Aunt Molly.
Katco Inc. devised a marketing campaign around the new beer, shortening the brewer’s nan”le to “Mickey’s” and promoting the beer as “Mickey’s Great Draft” and as “MGD”.
Shortly after the launch of the campaign, MBB was served with two lawsuits:
- Aunt Molly claims that she has patent rights to the formula for “Molly’s Great Draft” and sues for an accounting for all profits;
- Miller Brewing Company, a large brewing company located in the United States claims that the use of the name “Mickey’s” and “Mickey’s Great Draft” infringe upon its trademark registration and brand names “Mickey’s”, ‘%Mickey’s Fine Malt Liquor” and “Miller Genuine Draft”. It further claims the initials “MGD” are a recognized nickname of their beer and that the use of all of the names infringes its intellectual property rights.
MBB claims that its beer tastes significantly different from Miller Brewing Company’s beer and that its marketing colours and logo are also significantly different.
Required: Examine the legal principles and issues that will be considered as pmt of both lawsuits and the likely result. Could MBB have avoided the problem by marketing the product as “Molly’s Great Draft”? Would Aunt Molly’s consent be required?
Problem 4 (25 marks)
Katco Inc. has further legal problems. Andrew, who was in his final year as a Brock co-op student had commenced work with Katco Inc. on January 1st and was to continue working until May 3 1st in order to complete his final co-op term. Katharine was distressed that Andrew regularly came to work wearing sweat pants, t-shilts and hoodies, which she considered to be unacceptable attire and she complained a number of times. Andrew told Katharine that he did not understand her problem since he was working in front of a computer all day and did not meet any clients. He preferred to be comfortable rather than fashionable. On March 17fr Andrew came to work with spiked, coloured hair, two new ean•ings, flip flops and beach shorts claiming it was his “March Break” outfit. Katharine told him to go home and change and, when Andrew protested, fired him in front of the receptionist and three clients in the reception area. Katharine told Andrew that he was incompetent, unpresentable and would never become successful because of his attitude.
In subsequently discussing the firing with the receptionist, Katharine learned that Andrew:
- had taken client’s files home on weekends to complete work which was a breach of confidentiality rules;
- had completed marketing programs for his mother and two cousins during office hours and had not billed them for his services;
- had made a copy of Katco Inc.’s graphics software which they had developed and taken it home.
Andrew has commenced an action for unjust dismissal and is seeking damages of $85,000.00. He claims that since he cannot complete his co-op accounting term he will not be able to graduate and will therefore be forced to spend an additional year at Brock University and therefore will lose a full year’s salary. Andrew claims an additional amount of $100,000.00 for mental distress. Psychiatric evidence indicates that Andrew did suffer emotional distress and damage to his self-esteem as a result of the firing and was considering abandoning his aspiration to go into marketing or advertising as a result of Katharine’s comments.
Required: Outline the issues which will be raised by the paxties and the outcome of the action. Be certain to explain the applicable principles and their relation to the fact
