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Fordham

 Id:    A09323211  
Business  Law  I  
 
 
Part  Two  -­‐  Essays  
 
Question  1.a:    
Specific  Performance  
 
Question  1.b:  
In  this  contract  breach  scenario,  Good  Faith  is  the  injured  party  that  is  seeking  
specific  performance  from  the  defaulting  party  Kreative.    The  contract  called  for  
Kreative  to  install  Duravit  sinks.  However,  Koehler  sinks  were  installed  instead.    If  
this  were  a  case  involving  a  contract  for  the  sale  of  real  property,  the  courts  would  
have  granted  specific  performance  out  of  Kreative.    However,  since  this  contract  
called  for  a  service  to  be  performed  by  Kreative  for  Good  Faith,  a  court  of  equity  will  
not  rule  in  favor  of  Good  Faith  for  a  specific  performance  remedy.  
 
Question  1.c:  
If  Good  Faith  were  to  seek  monetary  damages  as  remedies,  compensatory  damages  
could  be  awarded  to  place  the  injured  party  (Good  Faith)  in  a  position  as  good  as  the  
one  it  would  have  occupied  had  the  other  party  (Kreative)  performed  under  
contract.      Monetary  damages  can  be  awarded  only  for  losses  that  are  foreseeable,  
established  with  reasonable  certainty,  and  unavoidable.    The  amount  is  computed  as  
follows:  
 
Compensatory  Damages  =  Loss  of  Value  +  Incidental  Damages  +  Consequential  
Damages  –  Loss/Cost  Avoided  by  Injured  Party  
 
The  Loss  of  Value  =  Value  of  Promised  Performance  –  Value  of  Actual  Performance.    
For  this  scenario,  the  Loss  of  Value  is  $75,000  because  this  is  the  total  amount  lost  in  
market  value  of  the  building.  
 
Incidental  damages  are  damages  that  arise  directly  out  of  the  breach.  In  this  case,  
the  incidental  damages  are  the  costs  to  replace  the  sinks  in  all  of  the  condo  units  
($125,000).  
 
Consequential  damages  include  lost  profits  and  injury  to  person  or  property  
resulting  from  defective  performance.  From  the  details  of  this  case,  it  can  be  
inferred  that  there  were  no  consequential  damages  to  Good  Faith  ($0).  
 
Costs  avoided  include  any  loss  that  the  injured  party  (Good  Faith)  has  avoided  by  
not  having  to  perform.    From  the  details  of  this  case,  it  can  be  inferred  that  there  
were  no  costs  avoided  by  Good  Faith  ($0).  
 
Based  on  the  above  information,    
Compensatory  Damages  Good  Faith  could  receive  =  $75,000  +  $125,000  =  $200,000  
 
However,  since  there  is  already  a  liquidated  damages  clause  in  the  contract,  Good  
Faith  would  receive  $100,000.  
 
Question  2.d  
A  tort  occurs  when  a  duty  owed  by  one  person  to  another  is  breached  and  
proximately  causes  injury  or  damage  to  the  owner  of  a  legally  protected  interest.    
The  law  provides  protection  against  intentional  harm  to  the  person.      
 
Destiny  is  personably  liable  for  the  following  torts  against  Sam:  
• Assault:  Sam  could  argue  that  she  felt  imminent  bodily  harm  as  Destiny  marched  
towards  her.  
• Battery:  Sam  could  argue  that  while  forcibly  being  escorted  to  the  office  there  
was  offensive  contact  by  Destiny  
• False  Imprisonment:  By  being  detained  in  an  office  for  5  hours,  Sam  could  argue  
that  there  was  intentional  confinement  against  her  will.  
• Defamation:    Sam  could  argue  that  when  Destiny  falsely  accused  her  of  writing  
the  letter  in  front  of  everyone  in  the  cafeteria,  it  diminished  her  reputation  and  
the  respect  to  which  she  was  held.  
 
Destiny,  being  the  general  partner,  acts  as  the  agent  Good  Faith.  However,  based  on  
the  facts  provided,  Good  Faith  did  not  authorize  Destiny  to  forcibly  detain  Sam  and  
was  not  negligent  or  reckless  in  failing  to  prevent  the  above  torts  (i.e., b/c it knew
that Destiny was prone to violence).    Good  Faith  is  not  liable  for  any  of  the  torts.    If  
Good  Faith  were  found  liable  for  any  of  the  torts,  the  limited  partners  would  be  
liable  only  up  to  the  value  of  the  assets  that  they  put  into  the  company.  The  General  
Partner  would  be  liable  for  any  short-­‐fall  in  damages  owed.  
 
Question  2.e  
Krazy  is  an  employee  agent  of  the  principal  Kreative.    This  relationship  is  a  
consensual  agency  relationship  in  which  the  agent  acts  as  a  representative  or  on  
behalf  of  the  principal  with  power  to  affect  the  legal  rights  and  duties  of  the  
principal.    An  employee  is  an  agent  whose  principal  controls  or  has  the  right  to  
control  the  manner  and  means  of  the  agent’s  performance  of  work.      
 
In  addition,  Sam  is  an  employee  agent  of  the  principal  Good  Faith.    The  fake  letter  
was  written  by  Krazy  in  order  to  imply  that  Sam  had  actual  authority  to  change  the  
terms  of  the  contract  for  Good  Faith.    
 
In  this  contract  between  Kreative  and  Good  Faith,  Krazy  was  acting  as  an  agent  with  
actual  authority  to  install  the  sinks  on  behalf  of  the  disclosed  principal  Kreative.      
 
Krazy  was  negligent  and  did  commit  fraud  when  he  wrote  the  fake  letter  from  Sam.    
However,  it  was  not  foreseeable  that  this  would  cause  the  harms  by  Destiny  against  
Sam.    Therefore,  neither  Krazy  nor  Kreative  would  be  found  liable  for  the  harm  
caused.    If  for  some  reason,  Krazy  was  deemed  personally  liable,  Kreative  would  not  
need  to  indemnify  Krazy  because  he  did  not  act  within  the  scope  of  his  actual  
authority.  
 
 
 
Question  3.f  
Good  Faith  is  a  limited  partnership  in  which  Destiny  is  the  general  partner  who  
manages  the  company  and  Hope  and  Faith  are  limited  partners.    As  a  general  
partner,  Destiny  has  unlimited  liability  for  the  partnership’s  debts  while  limited  
partners  have  limited  liability  for  the  partnership’s  debts.    Each  of  the  partners  owes  
the  following  duties  to  one  another:  Duty  of  loyalty,  duty  of  obedience,  duty  of  care,  
duty  to  inform,  and  duty  to  account  to  the  partnership.  
 
In  this  scenario,  it  can  be  implied  that  Faith  is  also  a  general  partner  since  her  name  
is  part  of  the  legal  name  of  the  entity.    It  can  also  be  implied  by  Hope’s  conduct  in  
making  management  decisions,  that  she  too  is  a  general  partner.    As  a  result  of  this,  
all  3  partners  are  equally  liable  for  the  $500,000  debt  owed  to  Benevolent  Bank.