A. Contracts (COMMERCIAL)
John goes to the internet to purchase some computer software. John locates Ace Inc. Computer Software web site. Ace has the software John wants and John places the order by identifying himself and orders two types of software.Ace then sends John a letter of confirmation of his order over the internet. When the software arrives at John’s place, John refuses to accept and refuses delivery. After placing the order, John found the same software at a cheaper price. Assuming that the various cyberspace laws only address authentication, attribution, warranties and signature verification and is not applicable, discuss this situation by applying Article 2 of the Uniform Commercial Code. Note, remember to discuss the elements of Article 2.
The Uniform Commercial Code Article 2 Sec 236 provides for remedies in the sale on approval, return of goods bought sales of property and rights to creditors. This in relation to the outlined scenario for refusal of delivery of goods from Ace by John is sufficiently provided for by this clause. John’s option of refusal of delivery of the said goods was lawful provided that the goods were returned to the seller in the initial form and merchantable quality or in simple terms their initial quality. However, the same laws provide that goods should only be returned if there is or are sufficient reasons for the return of goods. In addition, the return of the said goods only happens if the buyer is willing and is able to foot all expenses and insurance from risk of the said retuned product.
As a result, John is liable for the costs incurred by the firm on the return of the goods provided that these goods are returned in their initial form and that any risks that befall the goods, john will be liable to service for the damages of the goods. Hence, he will also have to prove why he changed his mind during the last minute when goods had already been delivered by the firm instead of prior comparisons before the actual purchase of goods from Ace Inc.
It is difficult for John to refuse the goods as he had already been subjected to acceptance of the offer offered by the offeree, Ace Inc. to purchase the goods at a higher price in comparison with other market players. In addition, it is also evident that he had prior knowledge of the existence of other market players but expressly ignored the presence of other players who sold identical products in the internet. The statement provided is that John had the free will of seeking other sellers of identical software but did so out of unknown reasons. Hence, he should be subjected to accept the goods as he accepted offer on a fair basis coupled by the passage of consideration from the offeree, John, to the offerer, Ace Inc. After receiving the letter of confirmation, he should have replied within tens days prior to the delivery of the said product to result in a revocation of the offer but he did not.
B. Contracts (COMMERCIAL)
Erma, a merchant, receives a brochure from Ammco regarding some merchandise that is sold in Erma’s business. Erma then sends in a purchase order ordering 25 units of merchandise (which exceeds $500.00 in value). Ammco upon receipt of the order, sends a letter of confirmation containing additional information which states that the price did not include shipping and insurance costs and that the shipping costs and insurance would be added on to the total contract price. While the goods were in transit, the truck was hijacked and all the merchandise, including Erma’s order. What law is applicable to this transaction and why? Was there proper formation? Is the carrier liable for the stolen merchandise? Is Ammco liable? Is Erma liable? Discuss.
Contracts provide different remedies in relation to sale of damaged goods depending on whether the damage of the goods happened when the goods were in transit on the way to the buyer or the damage of the said goods happened when the goods were already in the seller’s possession. Article 2 of the Uniform Commercial Code provides remedies in merchant trade of goods and provision of affiliated services. Erma in essence is a trader or merchant and receives a brochure bearing an advertisement of goods, which she stocks, within her trading premises. Thus, the advertisement could be described as an offer with the aim of attracting an offer, as both Erma and Ammco are traders making the offer subject for negotiation between the two parties. This is an implied form of offer in that Ammco is willing to make sale of the said gods in their condition and the stated price all of which can be agreed upon by both parties. Hence, this is an indication of the power held by the buyer in that he or she has the power to accept the goods or reject them on specific conditions provided in the law of contracts with specific reference to the sale of goods.
In addition, the decision to purchase the goods is in express terms and indication that the goods to be delivered must be sufficient for their intended purpose. The lack of which they buyer should no accept the merchandise as it unusable. Damaged gods might be rendered unusable by the accident leading to their loss in value. On the other hand, Ammco does not guarantee the delivery of the said goods in proper condition hence the inclusion of the said costs of transit and insurance in the total costs. This is an express statement, which guarantees the buyer the delivery of the goods in the quality upon which it was agreed upon and they are fit for consumption or for the purpose of which they were purchased by Erma.
However, the risk or loss of the goods on transit depends on the ownership or in who is in the possession of the said goods. Ammco expressly stated the sale of goods in their quality and fit for the purpose, which they were meant for by Erma. However in the presence of carriers assigned with the task of delivery of the said goods the liability or risk, loss and damage of the said goods is transferred from the seller or offeree to the owner who had confirmed and agreed to the terms and conditions of the sale. This is sufficiently provided in the Cost insurance and freight contracts in the UCC2 -320 (2) requiring the sellers to pass on the liability of the goods after sufficient consideration has been received from the buyer. This is sufficiently provided for UCC 2- 401 (2) (a) title passes to the buyer at the time and place of shipment. Passage of the consideration is an indication of the passage of the liability form the seller as the buyer had ample time of more than ten days to make any objections or refuse the offer as provided by the
However, the law provides that if there were presence of insurance costs as part of the purchase cost then the insurance would provide sufficient payment for the damaged goods: as this is a CIF contract whereby the cost of goods, insurance and freight are inclusive in the contract price for the goods and services. In addition once Ammco put the goods in the care of the carrier with the aim of delivery of the said the goods, then the liability was passed from the seller to the buyer. In this case, due to the presence of insurance cost within the contract price, the goods were sufficiently insured drawing costs of damages for the owner, Erma. However, the incident which occurred was not damage of the said goods as provided by the carrier rules which is enforceable in the UCC article 7. Hence, in essence, the carrier is not liable but the insurance would be sufficient to ensure payment for the damages of the goods.
E. Intra-Business Relationship
Rudolph has a chain store operation in country X. Rudolph decides to expand his business operations into the United States. To cover the cost of expansion, Rudolph decides to “franchise” the operation into the United States Carl, a resident of country X, enters into a franchise agreement with Rudolph to open a franchise in the United States. The franchise agreement requires that Carl make a substantial investment of funds to open the franchise in the United States. Furthermore, the franchise agreement requires that Carl’s franchise employ only US residents as employees and that the franchise funds be used to purchase land and construction of a building in the United States
Rudolph realizes that Carl does not have the business acumen to run the franchise in the United States. Randolph sends Robert, a resident of country X, to manage and direct the franchise on a temporary basis until Carl is competent to run the franchise in the United States. To make sure the franchise complies with US accounting laws, Robert contracts with Flo (who has a small accounting firm) in the United States. However, Robert requires that Flo work for the franchise exclusively and full time, that Flo maintain an office on the premises of the franchise and Robert constantly reviews the records and documents of Flo to make sure they are accurate. Since Flo spends a lot of time at the franchise, Robert is always asking Flo out for a date and is always making “sexual comments” about her. What is the immigration status of Carl? What is the immigration status of Robert? What is the legal status of Flo? Can Flo maintain a “sexual harassment” action against Robert.
Carl in essence is a resident of Country X but in legal terms, he is an investor within the franchise business after forming an agreement or contract with his fellow countryman Rudolph. However, Carl could be considered as a citizen in any way as he has not attained any form of citizenship. This is because despite the Franchises Agreements not requiring the presence of documentation he is still not a citizen. This is provided for by the subsection 1324(a)(2)which prohibits any act of trying to bring any illegal alien into the united states by any means whatsoever with an aim of legalizing their stay or making them citizens of the American state. Carl is not legible for citizenship because he doe not qualify and any indulgence in activities, which he is not authorized to complete, would be met by deportation back to Country X.
On the other hand, Robert is an illegal immigrant if he does not possess authentic and precise documents of authorization for him to take over from Carl in operating the entity. This is because working in the United States requires approved and authenticated work permits. Despite their agreement with Rudolph to replace Carl, he does not qualify for travel, as the Franchise Agreements do not allow for the automatic work placement of individuals from other countries into the United States. Robert constant outings with Flo could impede the work relations leading to undesirable effect such as hindering office operations when they are together. In addition, Flo’s submission to his request could be out of the need to maintain relations with the franchise management because they are offering her office with the chance to earn money and expand her expertise and business. In addition, she has submitted to his advances due to the fear of losing an opportunity or more so threats from Robert to withdraw services from her office.
Robert’s constant interaction and sexual comments about Flo’s sexuality amounts to sexual harassment. This is because sexual harassment is considered as the need for sexual favors in promise of return with other greater actions such as rewards. The comments about Flo’s sexuality are determined if the comments are welcomed or unwelcome by Flo. Hence, her reactions towards Robert’s comments are a determinant if she demands or solicits for such attention and comments from Robert.
However, in the sense that Flo feels insecure or that the comments are unwarranted and an invasion to her privacy she has the right of seeking legal redress by filing complaints with the relevant law enforcing organizations near her in the United States. Flo on the other hand is a legal citizen of the United States. Her friendship with Robert could be a means of enabling Robert attain citizenship within the United States. This is however forbidden by the laws of the United States. Hence, Robert could be deported if he has ills intentions of using Flo to gain citizenship in the United States. On the other hand, she could be using Robert with the thought of gaining contracts for her small accounting firm despite her acts being considered as legal under the American laws it could be described as unethical. She might be in essence seducing him to retain her firm’s position as the accountants of the franchise.
Arthur is the vice president of Finance at Inco Incorporated. Arthur is responsible for determining if the corporation will give out dividends. The dividends are to be given in the next quarter. Arthur reviews the financial status of the corporation and determines that no dividends could be given in the next quarter. Arthur and his staff decides to remove some funds from the “employee retirement accounts”, also the “unemployment compensation payments”, workers compensation premium accounts and the quarterly tax statement accounts (manipulating the books) to show a profit for the current quarter. Based on Arthur’s report, the Board of Directors declares a dividend. When the dividend is declared, the market price of the stock increases and Inco receives paid in surplus and allows Arthur to replenish the accounts where the funds were withdrawn. Also, Arthur exercises his stock options when the price of shares in Inco increased. Has Arthur violated any laws? Are the Directors liable for Arthur’s action? What are the proper sources for dividends? Also, briefly discuss the various forms of business ownership.
In this case, Arthur has indeed violated legal laws through his failure to exercise due care when handling the books of account of the corporation. As the vice president of the corporation, Arthur is entitled to rights from the corporation and in return owes significant duties, a fiduciary duty in this case. Manipulation of the books of accounts and the presentation of false information in addition to withholding funds are reasonable grounds to sue Arthur. His actions can be deemed as taking advantage of his authoritative position to amass wealth. This can sufficiently amount to embezzlement. In these terms, there is sufficient evidence to prove negligence and malice on the part of Arthur and his role of fulfilling his duties to the corporation. With regard to the Criminal Act section 802, Arthur’s actions are dully punishable by jail term.
The directors would and should not be held liable for Arthur’s actions. They acted out of profession with full trust towards the accounting facts submitted by Arthur. Even under due, there is no way they would have arrived at the conclusion that the information was either corrupted or misleading. However, an exception to the above conclusion should be made if it can be established that the directors had a part to play in Arthur’s actions. Other than that, they should not owe to any liability in the matter
With regard to the correct dividends, a qualified review of the corporation’s books of accounts should be undertaken since previous accounting information was unqualified. The above task should yield to the true net profit entitled to the corporation. Primarily, dividends are declared after a company has deducted all other expenses from the gross profit to arrive to the net profit. Additionally, the management should seek to rebuff the previous dividend declaration that had sourced its conclusion from Arthur’s information. This should involve retrieving all funds apportioned to the various accounts in the event of the dividend declaration.
Other than the above option, the management can seek to implement recommended methods of raising their revenue. This may include retailing some of the corporation’s permanent assets. The sale should be done to meet a value above that stipulated in the books of accounts to acquire higher revenue. In general, permanent assets are after every financial year re-entered into the books of account with their values continually depleting until they are scrapped. Therefore, it would make sense when they are sold as a source of raising the corporation’s revenue. The other source of revenue option for the corporation would be its own savings. If the corporation has been able to raise profits with the fall of every financial year, then it should have stored savings sufficient to supply the revenue for the dividends.