Project 2: Making Decisions That are Legal and Ethical

A contract can be made in different ways. A contract can be verbally made without being documented or can also be made through the two parties' contact. Although, there was no written agreement between Mark and Edward that does not nullify the contract under the common law. Mark can further prove that his contract was legal in the court by arguing on the type of contract they entered with Edward on behalf of Turnip Plaza Hotel. Mark can prove that the contract was a unilateral contract that made it a legal agreement between them. A unilateral contract involves one of the parties promising to take a given action in the future if the other party agrees to perform what is required of them (Contract Law, n.d). In the current case, Edward promised to mark a promotion and a 50% increase in his salary in the new position if he agreed to stay in Turnip Plaza Hotel. This meant that Mark would have to reject the offer made to him by Huron Overnight Plaza. Since mark performed his part of agreeing to stay at Turnip Plaza, Edward has the legal obligation to fulfill his part of the promise of promoting Mark to his new position. The termination of the contract just before the start of the new contract was thus illegal.

Different provisions allow the termination of a contract. However, none of the provisions was met in Mark's case, which makes the termination illegal. Some of the cases where a termination can be valid include when there are specific provisions in the contract, when the time lapses, when the offeree rejects the offer, when there is a counter, when revocation is done, cases of illegality, or when there is mental incapacitation or death of one of the parties (Chen-Wishart, 2017). The offerer can only revoke the contract when the offeree has not yet accepted the contract. In the case of Mark, he had already accepted the contract, and there was a legal agreement between the two parties to the contract. It was thus not possible to revoke the contract at this stage. There was no case of mental incapacitation of any of the two parties to the contract. Therefore, the contract cannot be terminated under such grounds.

Additionally, there was no counteroffer given to Mark, rendering the current contract invalid and thus terminated it. Mark's contract was terminated as a result of corporate restructuring and also issues relayed to liability risks. The reasons for termination of the contract did not fall under any of the legal contract termination reasons. Therefore, Mark can successfully file a court case citing unfair contract termination against Turnip Plaza Hotel.

Mark can also argue his case in the court of law based on the responsibilities of Edward as an agent of Turnip Plaza Hotel. As an employee of Turnip Plaza Hotel, Edward executes his mandate as provided in his contract and position on behalf of Turnip Plaza Hotel. Edward acted in his full capacity as the Manager of Turnip Plaza Hotel when entering into the new contract with Mark. Edward is a general agent of Turnip Plaza. A general agent has a broad authority to act on behalf of the principle (Chen-Wishart, 2017). Employees are general agents of their employers to the extent of their duties and authority granted in their positions. As a general agent, Edward entered into a contract with Mark to increase his earnings by 50% and to extend the contract by two years. As a result of the agency provisions under the common law, the contract was entered between Turnip Plaza Hotel and Mark, and it was not a contract between Edward and Mark since Edward is an agent of the hotel.

Turnip Plaza is a disclosed principal. Disclosed principles are well known to the third parties as the contract is being entered into. Mark knows Turnip Plaza Hotel and knows that Edward is acting on behalf of the hotel. As per the contract law in Michigan, a breach of contract involves the failure to fulfill the material terms of an agreement. In Michigan, a contract is not about intent, but it is either performed or not performed, and the intentional and wilful breach of a contract has other additional consequences (Figot, 2012). Mark's contract with Turnip Plaza Hotel was thus breached since it was not performed as per the provisions of Michigan contract laws. The breach of the contract also amounted to a material breach of contract under the Michigan contract laws. A material breach of contract involves a complete termination of the contract by one of the parties when no substantial work is already done (Figot, 2012). Since the contract between Mark and Turnip Plaza was terminated before being executed, the termination amounted to a material breach of contract.

Damages and Remedies to Mark

Remedies are essential when contracts are terminated—unfair or illegal termination of contract results in losses to either of the parties. When one party to a contract does not fulfill their legal obligations under the contract ("breaching the contract"), the other party may seek a remedy, or some combination of remedies, to make the injured party whole (Contract Remedies, n.d). Thus, the legal provisions of the common law require the party that terminates the contract to remedy or pay for the damages caused to the other party. There are different types of remedies that Mark could receive if he won the case in the court of law. The remedies can include Remedies at Law, primarily issued in the form of monetary amounts called damages, and are awarded through court orders (Contract Remedies, n.d). Equitable remedies can also be sought in order to pay for all the losses incurred by Mark. Mark can receive both damages and remedies in the same court if the case is won in such a court decision.

Mark may also be entitled to consequential damages. Consequential damages resulting from any unusual losses which would be incurred by the plaintiff and which the parties knew would arise from the breach of the contract (Breach of Contract, n.d). Both Mark and Turnip Plaza Hotel know that if the contract is terminated, Mark will lose his job and the previous offer that Huron Overnight Inn had given. Mark would also incur other losses when seeking another employment contract. Other losses which the plaintiff may incur would include mental and psychological torture, which may also be costly to the plaintiff. As a result, when the damages are being compensated, Mark may be awarded by the jury an amount of money equal to the amount of money which he spent in seeking another job or when solving psychological issues related to the contract termination and breach.

Mark may also be awarded specific performance for the damages caused. The contract between Mark and Turnip Plaza was a promotion contract by the company that would last for two years. Terminating the contract before the lapse of the period meant that Mark could not execute his part of the contract. The courts give a specific performance order to avail an equitable remedy to the plaintiff (Kat, 2015). In specific performance, the party which breached the contract must redo the contract and have the plaintiff perform their duties based on the contract agreement. If Mark is awarded specific performance for the damages incurred, he would have his contract reinstated. He would serve the company for the period stipulated in the contract, two years with stipulated pay.

Ethical Issues

Turnip Plaza Hotel has an ethical obligation to fulfill all the promises made by Edward to Mark, and they should not lay Mark off under such circumstances. It is essential for any business that requires justice from its competitors and the general public to offer justice to its stakeholders. By operating ethically, Turnip Plaza Hotel will provide justice to employees like Mark and ensure that they comply with all the common law provisions on contracts. There are different ethics tests that Turnip Plaza Hotel needs to ensure that they pass in the case of Mark. These include rights, justice and fairness, virtues, and the common good. Implementing measures to ensure these tests are fulfilled is critical in handling the ethical issues in the case of Mark and the breach of the contract.

Turnip plaza has to ensure that the rights of all the employees and stakeholders are upheld. The management of Turnip Plaza needs to ask themselves what duties they have in respecting the rights of the employees. Every employee has their rights which the management must respect. Respecting the rights of the employees involves doing what is right to the employees and granting them what their due is (Clegg et al., 2017). By making a promise to Mark, Edward committed on behalf of Turnip Plaza Hotel to fulfill all the contract components. This means that it is the right of Mark to receive all the provisions of their contract with Edward. For Turnip Plaza Hotel to be deemed as operating ethically, they have to respect the rights of Mark and offer what is due to mark.

Turnip Plaza Hotel must also ensure that justice and fairness are served to all the parties. It is unfair to dismiss Mark when his contract is just about to start. By acting ethically, Turnip Plaza Hotel must consider its obligation to serve justice to mark. Doing justice ensures that there is fairness and that all the parties are treated the same. Any difference in treatment of the employees must be well explained by a rationale that does not bring about conflict and discrimination. The hotel must thus be just to Mark and offer him the proper compensation. Justice is accompanied by being virtuous. A reasonable person upholds fairness, honesty, integrity and shows passion (Svensson & Wood, 2018). Edward may not have anticipated the termination of Mark's contract when it was entered. In this case, Mark was considering joining Huron Overnight Inn for better pay and working conditions. By promising better conditions at Turnip Plaza Hotel, Edward made a promise which the hotel needs to fulfill. It is a case of dishonesty to make such a promise to Mark and, after that, terminate his contract with the hotel. It also shows low levels of integrity in the way the employee was treated. Additionally, the hotel management ought to show some compassion to Mark for the challenges he is likely to face following the breach of the contract with Turnip Plaza Hotel. These virtues were thus not honored, which made the whole process unethical, and they should be considered to make the operations of the hotel ethical.

Every ethical decision should consider the common good of all the parties involved. When making a decision to terminate or execute any contract, the interest of all the parties must be considered. Mark had significantly impacted the revenue levels of Turnip Plaza Hotel. As a result, losing Mark as an employee would be costly to Turnip Hotel. Edward promised Mark the two-year contract and a 50% increase in his earnings with this consideration. This was done in the interest of both the company and Mark himself. However, the termination of the contract did not have the interest of Mark but was only done in the interest of the company. This was unethical for the company.

Turnip Plaza Hotel should act ethically and remedy the situation. There are several ways to fix the current case ethically. One is to offer full compensation to Mark for the damages incurred. This can be done at the company level or the courts level. The hotel can wait for the court verdict if Mark decides to file a case against them and fulfill all the obligations per the court's determination. Turnip Plaza can also ethically settle the case out of the courts and renegotiate the contract with Mark or implement the contract as per the previous agreement. This would reduce blowing the issue out of proportion which may cost the hotel also since Mark has a high reputation in the hotel as a tour guide.

Conclusion

The execution of contracts has to be done according to the laws governing contracts in the given state and federal laws. A contract may be entered into through a promise as made by Edward to Mark. As a result, Mark has all the legal protection under the common law and the contract laws in Michigan. Edward entered into the contract with Mark on behalf of Turnip Plaza since Edward is an agent. If mark won the case, he is entitled to additional damages, including consequential damages and compensatory damages. Turnip Plaza has an ethical obligation to fulfill the fulfillment of Edward's promises to Mark.

References