Exam 9: The Requirements of Form and Writing

Winston was an engineer of great repute in the field of fluid mechanics. Some years ago, he took out a patent on a general theory of how fluid moves through a particular shape of valve, and a patent on a unique valve specifically adapted for use in a nuclear reactor. He had formed a company that had produced this latter valve in the Canadian market and other countries which used Canada's CANDU reactor. After a number of years of successful business operations, Winston was approached by a group of investors interested in purchasing his company, and a deal was concluded. As part of the contract of purchase and sale, Winston sold the patent to the valve and agreed that he would not work in or carry on any other business manufacturing valves, nor would he engage in any other business that might compete in any way with the purchasers business for a period of ten years. The restrictions applied on a worldwide basis. Winston retired to Florida and after five restless years again became involved in the field of fluid mechanics, making designs for certain parts for nuclear reactors for submarines of the United States Navy. One particular part that he designed and built was based on the patented principles of his general theory, which he had never sold, and while it was similar to his former valve in many ways, a slight change had rendered it patentable in its own right. On learning of the multimillion dollar sales that Winston had effected to the U.S. Navy, the purchasers of his former business brought suit for his breach of the contract. With his new valve, Winston had generated profits of $5 million before the "ten-year waiting period" had expired and $10 million after the period had expired. Discuss the relevant issues of contract bearing on this case, the relevant aspects of business which would assist the court in determining damages, if any, and render your own decision.A.C. 535.

Ruth sold her craft shop to Mary. The contract of sale had a clause which said that Ruth could not open a similar store for two years within a five-kilometre radius. This kind of clause is called

Jolene, aged 16, is hired by the Sparkle Company, a costume jewellery manufacturer, to learn the design and manufacture of costume jewellery for the upscale market. Under the contract she signs, she will receive quite a low salary for the first three years, and then will be put on the regular pay scale once her apprenticeship is completed. After a year, her designs are being sought by stores in Europe and the U.S.A. The world's largest and most prestigious costume jewellery firm, located in Paris, wishes to hire her and pay her a fabulous salary as well as give her the free use of a large apartment in the most chic part of Paris. Sparkle's management refuses to release her from her contract because her designs are building their reputation. "We taught her everything she knows," says the president of Sparkle.

Two weeks before Susan's 18^th birthday, her father gave her $3,000 to purchase a car. She chose a used car from the local dealer for $2,700, and having paid cash, drove the car home. After 300 kilometres the brakes needed considerable work. She felt that it might be more prudent to use her father's money as a start to savings for a new car. Accordingly, she returned the car and the keys to the dealer along with a letter that she was repudiating the contract. She had written the letter almost a week prior to her 18^th birthday, but was unable to deliver the car and letter until three days after her 18^th birthday. The dealer refused to refund her money, and Susan was forced to bring an action to recover her funds. Discuss the issue of capacity and repudiation that arise in this fact situation.

X sold his retail clothing business to Y. The business was located in a small town, and most of the customers lived within a radius of eight kilometres of the clothing shop. As a part of the sale agreement, X agreed not to set up a similar business in competition with Y for a period of five years or within a radius of eight kilometres of the shop. If the restrictive covenant was considered to be unreasonable by the court, the restriction would be amended to make it reasonable.

X sold his retail clothing business to Y. The business was located in a small town, and most of the customers lived within a radius of eight kilometres of the clothing shop. As a part of the sale agreement, X agreed not to set up a similar business in competition with Y for a period of five years or within a radius of eight kilometres of the shop. A court will strike down an unreasonable restriction, and thereby leave the purchaser unprotected from competition from the seller.

Mariah, a young woman aged 17, went shopping. She purchased a new coat on credit at a clothing store. Later the same day, she took her expensive watch to a jewellery shop to have a new watch band installed. While in the shop, she purchased on credit an additional watch for herself, and a silver bracelet as a gift for a friend. When the merchants later requested payment, Mabel refused to pay. All gifts purchased by minors are non-necessary items, and therefore Mariah is not bound by such a contract.

X sold his retail clothing business to Y. The business was located in a small town, and most of the customers lived within a radius of eight kilometres of the clothing shop. As a part of the sale agreement, X agreed not to set up a similar business in competition with Y for a period of five years or within a radius of eight kilometres of the shop. The "five-year; eight-kilometre radius" restriction is probably reasonable, as it protects the goodwill purchased by Y, and does not unnecessarily restrict X's right to set up business elsewhere.

James, a 16-year-old boy, got a job for a catalogue company selling household items that he ordered from the business and sold to his customers. James' grades at school suffered as a result of his job, and he was forced to give it up. He returned the goods he had purchased on credit, and notified the company that he was discontinuing his employment. The company contacted James, and told him that by having the goods in his possession the company had lost revenue opportunities. It then billed James for the cost of the goods. James is obliged to pay.

In general, the courts are reluctant to place any impediment in the way of a person seeking employment. As a consequence, a restrictive covenant in a contract of employment will not be enforced unless serious injury to the employer can be clearly demonstrated.

Mariah, a young woman aged 17, went shopping. She purchased a new coat on credit at a clothing store. Later the same day, she took her expensive watch to a jewellery shop to have a new watch band installed. While in the shop, she purchased on credit an additional watch for herself, and a silver bracelet as a gift for a friend. When the merchants later requested payment, Mabel refused to pay. Mariah is not bound by the contract to purchase the silver bracelet, because it is a non-necessary item for a minor.

The Competition Act is a statute that

Mariah, a young woman aged 17, went shopping. She purchased a new coat on credit at a clothing store. Later the same day, she took her expensive watch to a jewellery shop to have a new watch band installed. While in the shop, she purchased on credit an additional watch for herself, and a silver bracelet as a gift for a friend. When the merchants later requested payment, Mabel refused to pay. If Mariah accidentally damaged the watch while it was in her possession, the merchant cannot hold her liable for the cost of repair.

The protection extended to a minor under the rules of contract may be used by a minor to perpetrate a fraud on an unsuspecting merchant.

At age 16, Smith was a promising young hockey player. He was drafted by the Fredericton Firebirds to play for their club, a junior team one step below the professional league. One year into the contract, the Firebirds terminated the contract and required all of their players to sign new four-year contracts. Smith was to receive $250 weekly, along with room and board and the flexibility to complete his high school studies. In return, Smith agreed to play only for Fredericton and gave them the right to trade him to any other team or terminate the contract at any time. On his 18^th birthday, Smith visited the general manager of the Firebirds, and repudiated his contract. Smith had received offers from the professional league, which promised him far greater instruction with superior coaching, as well as $200,000 per season. Smith felt that an early jump on a professional career was vital to him, considering the early retirement age of most hockey players. The general manager was upset with Smith, and vowed to bring a suit against him if he signed with the professional league to set an example for the other players. Smith signed the contract with the professional team, and the general manager brought suit against him. Discuss the contractual issues raised in this case, and discuss in particular the issues of capacity, enforceability, and repudiation that bear in this instance. What aspects would a judge take into account in rendering a decision and why?

Don rented a small store from a landlord to carry on a business. Don stated that he was of legal age, 18, to carry out the deal when, in fact, he was only 17 years old. After a short period of time Don realized that his business plans were not working out and it would be in his best interest to return to school. By this time, the landlord was wondering why he had not received a cheque for Don's rent. When he confronted Don about this, Don informed him of his plans. The landlord told Don he would have to pay for the time he occupied the premises. Don said that he would not pay, and the landlord could not force him to pay because he was not of legal age and was insolvent. Discuss this situation using your knowledge of the law governing age of majority.

Any business firm or merchant that decides to enter into a contract with a minor assumes the risk (in the case of a contract for a non-necessary) that the minor might repudiate the agreement.

Rita, who is 15, makes a contract with Ahmed, who is 30, to babysit Ahmed's two children over March break. If Rita instead goes to Miami Beach with her parents, Ahmed can sue her.