Business Law and Ethics
Safan Nizar Ali Dauva
Professor Kurt S. Odenwald
Business Law and Ethics
February 17, 2011
Week 6 Assignment
Chapter 23
Question no.5
Answer: No. CP Clare did not seek to improve the deal to take advantage of IRI's sunk costs; rather it sought to enforce the bargain. And it did not take unexpected action against which IRI could not have defended. That a manufacturer will want to reassess its sales structure as volume grows must be understood by everyone--especially by a professional sales representative such as IRI. No one, least of all IRI, could have thought that a contract permitting termination on 30 days' notice, with payment of commissions for deliveries within 90 days thereafter, entitled the representative to the entire future value of the goodwill built up by its work. Goodwill (beyond the 90-day residual) was allocated to the manufacturer. The terms on which the parties would part ways were handled expressly in this contract, and IRI got what it bargained for. IRI knew, or should have recognized, that the 90-day period created a risk; and it could have responded by demanding a higher commission rate to compensate.
Chapter 24
Question no. 8
Answer: Yes. Generally, an agent is himself liable for the consequences of his actions for committing tort or crime when working for the principle. Nevertheless, principal may also be liable for the torts and crimes committed by his agent. Courts generally use two predominant theories to impose liability on principals for the injuries caused by their agents: respondeat superior and direct liability. Under the doctrine of respondeat superior, the principal is liable if the agent was working within the scope of the agency when the tort occurred. Though this act of agent benefits the principal as well in gaining the business, it is unlikely to be applicable in the case of Carl Brown. In the other hand, under the direct liability, principal is basically liable when it is negligent in the hiring and /or the
Professor Kurt S. Odenwald
Business Law and Ethics
February 17, 2011
Week 6 Assignment
Chapter 23
Question no.5
Answer: No. CP Clare did not seek to improve the deal to take advantage of IRI's sunk costs; rather it sought to enforce the bargain. And it did not take unexpected action against which IRI could not have defended. That a manufacturer will want to reassess its sales structure as volume grows must be understood by everyone--especially by a professional sales representative such as IRI. No one, least of all IRI, could have thought that a contract permitting termination on 30 days' notice, with payment of commissions for deliveries within 90 days thereafter, entitled the representative to the entire future value of the goodwill built up by its work. Goodwill (beyond the 90-day residual) was allocated to the manufacturer. The terms on which the parties would part ways were handled expressly in this contract, and IRI got what it bargained for. IRI knew, or should have recognized, that the 90-day period created a risk; and it could have responded by demanding a higher commission rate to compensate.
Chapter 24
Question no. 8
Answer: Yes. Generally, an agent is himself liable for the consequences of his actions for committing tort or crime when working for the principle. Nevertheless, principal may also be liable for the torts and crimes committed by his agent. Courts generally use two predominant theories to impose liability on principals for the injuries caused by their agents: respondeat superior and direct liability. Under the doctrine of respondeat superior, the principal is liable if the agent was working within the scope of the agency when the tort occurred. Though this act of agent benefits the principal as well in gaining the business, it is unlikely to be applicable in the case of Carl Brown. In the other hand, under the direct liability, principal is basically liable when it is negligent in the hiring and /or the