Question

Sam Stevens lives in an apartment building where he has been working on his new invention, a machine that plays the sound of a barking dog to scare off potential intruders. A national chain store that sells safety products wants to sell Sam’s product exclusively. Although Sam and the chain store never signed a contract, Sam verbally told a store manager several months ago that he would ship 1,000 units. Sam comes home from work one day and finds two letters in his mailbox. One is an eviction notice from his landlord, Quinn, telling him he has to be out of the apartment in 30 days because his barking device has been bothering the other tenants. It also states that Sam was not allowed to conduct a business from his apartment. Sam is angry because he specifically told Quinn that he was working on a new invention, and Quinn had wished him luck. The second letter is from the chain store, demanding that Sam deliver the promised 1,000 units immediately. Specifically, the following critical elements must be addressed:

A. Analyze the elements of this case to determine whether a valid contract exists between Sam and the chain store. Support your response by identifying the elements of a valid contract in your analysis.

B. Assume there is not a valid contract between Sam and the chain store. Analyze the elements of a quasi-contract and a promissory estoppel to determine whether the chain store would prevail on a claim of either. Why or why not? Include support for your analysis.

C. Identify the rights and obligations of both the landlord and tenant under a standard residential lease agreement.

D. Based upon those rights and obligations, does Sam’s landlord have grounds to evict? Why or why not?

E. Further, what defenses might Sam raise to an eviction action? Support your response.

Various elements must be present to prove that a valid contract exists between Sam and the chain store.

· The four elements to a contract are______. (Chapter 13)

· The first element of ______ would be deemed to exist if [describe facts that are or should be present].

· The second element of ______ would be deemed to exist if [describe facts that are or should be present].

· The third element of _______ would be deemed to exist if [describe facts that are or should be present].

· The fourth element of _______ would be deemed to exist if [describe facts that are or should be present].

· If the elements of a contract did exist between these parties, there could still be some possible reasons why a contract might not be valid based on facts not present in the scenario. For example, if Sam was a minor at the time he made the agreement with the chain store, the contract would not be valid because______ . List some other reasons and elaborate on why a contract might be invalid.

· Discuss and explain any other information you deem relevant to this answer. (Chapters 13, 14, 15, and 16)

Even if there is not a valid legal contract between Sam and the chain store, there may still be a quasi-contract(Chapter 13) or elements of what is called a promissory estoppel. (Chapter 15)

· A quasi-contract is defined as__________ . In this case, a quasi-contract may exist if the following facts are true:_____________ . (Chapter 13)

· A promissory estoppel is defined as_______________ . This principle might apply to this case if__________ . (Chapters 13 and 16)

· Discuss and explain any other information you deem relevant to this answer.

The rights and obligations of both the landlord and tenant depend upon the term of their contract. Such a contract may be verbal or in writing under a standard residential lease agreement. (Chapters 13 and 50)

· Some facts that may support that Sam is in breach of that contract are_________ .

· Some facts that may support that Sam is not in breach of that contract are_____________ . (Chapters 16, 17, and 50)

· Discuss and explain any other information you deem relevant to this answer.

Based upon those rights and obligations, Sam’s landlord has/does not have grounds to evict because_____________ .

· Elaborate and explain.

E. Some defenses Sam might raise if his landlord tries to evict him include because_____________ .

· Elaborate and explain for each reason offered. Discuss and explain any other information you deem relevant to this answer. (Chapters 13, 14, 15, and 16)

Answer 1

Sam developed a new invention in his apartment—a machine that plays the sound of a barking dog to scare off intruders (the “Machine”). Sam specifically informed Quinn that he was developing the Machine from his apartment and Quinn acknowledged this by wishing him luck. At the same time, Sam made a verbal agreement to sell 1,000 units of the machine to the Chain Store. Subsequent to this, Sam received eviction letter/notice from Quinn, informing him that the noise from the Machine was bothering the other tenants. He received another letter/notice from the Chain Store demanding that Sam deliver the 1,000 units immediately.

There are four required elements that would have to be present to establish a “valid contract” between Sam and the Chain Store: (1) offer, (2) acceptance, (3) intention of legal consequences, and (4) consideration. (Kubasek et al., 2012). The first element, offer, appears to exist since Sam offered to provide the store manager with 1,000 units. But this element is questionable since Sam did not specifically state when they would be delivered. The second element, acceptance, is also questionable since the facts of the case only imply that the store manager agreed to the delivery. The third element, intention of legal consequence, is also shaky since they were apparently capable of making a legal decision, but there is no indication that the parties actually intended to enter a legally binding contract. The fourth and final element, consideration, requires that a promise must be exchanged for adequate consideration (Kubasek et al., 2012). Here, only Sam offered “consideration” when he promised to deliver the 1,000 units, but the store manager did not really provide any consideration to Sam such as a deposit or promise to pay. So, the second element of a valid contract appears to be lacking. Based on all of this, I conclude that there was no valid contract between Sam and the Chain Store.

Even if there is not a valid legal contract between Sam and the Chain Store, there may still be a quasi-contract or elements of what is called a promissory estoppel. A quasi-contract is a legally binding “substitute” agreement created by the courts between two parties who do not have an actual contract, but in the interest of “equity” and “fairness” imposes a contractual obligation between them (Kubasek et al., 2012). A major element of a quasi-contract is “unjust enrichment” (avoiding one party unfairly gaining at the expense of the other party). Here, it doesn’t look like Sam’s failure to deliver “immediately” provided him with any unfair advantage. At the same time, it is apparent (based on the limited facts) that the Chain Store was not unjustly damaged by Sam’s failure to deliver immediately. Accordingly, it is not likely that the Chain Store would prevail on a claim of quasi-contract against Sam

A “promissory estoppel” is a legal principle that a promise is enforceable by law when the promisor (Sam) makes a promise to the promise (Chain Store) who relies on it to their detriment. Based on the same assumption that the Chain Store was not apparently “unjustly damaged), the concept of promissory estoppel would also not likely apply

Covenant of Quiet Enjoyment - The rights and obligations of both the tenant and landlord depend upon their contract. Standard residential lease agreements usually include a “covenant of quiet enjoyment” which insures a landlord (Quinn) or tenant (Sam) against a disturbance of their right to possess or use property (Kubasek et al., 2012). Some of the facts may support that Sam is in breach of the rental contract since it is apparent that the noise from his barking Machine was disturbing the neighbors, which could be a breach of the landlord’s covenant of quiet enjoyment as it relates to the other apartment tenant’s rights. In that case, Sam could be evicted.

Conducting a Business – Unless otherwise specified, most standard residential lease agreements prohibit the operation of a commercial enterprise on residential property (Kubasek et al., 2012). Violation of this provision can be grounds for eviction. However, a case could be made for Sam that his landlord, Quinn, implicitly approved of Sam’s conducting a business on the premises when he was, (1) notified by Sam that he was conducting business, and (2) he acknowledged this was okay by wishing him “good luck.”

Grounds for Eviction – Base on the concept of “covenant of quiet enjoyment,” it looks like he could be subject to eviction from Quinn. However, this would all hinge on the level to which he disturbed the other tenants. If the noise was “reasonable,” (not excessively loud) for the situation, then Sam might have a good defense. Moreover, Sam may have a legal defense against the Landlord’s eviction and sue for damages or bring a suit against the landlord for breach of contract, if he can prove that the noise made by his barking Machine was not unreasonably loud and did not substantially interfere with the other tenant’s right of quiet enjoyment

In regards to the “conducting a business” issue, it looks like Quinn implicitly, yet voluntarily, waived his right to challenge Sam’s operation of a business and cannot legally evict him unless he can prove otherwise. If that is the case, Sam could sue the Landlord for breach of contract.

References
ubasek, N., Browne, M., Herron, D., Giampetro-Meyer., A., Barkacs, L., Dhooge, L., & Williamson, C., (2012). Dynamic business law, New York: McGraw-Hill/Irwin