Project 2: Making Decisions That are Legal and Ethical

Learning Topic

Legal Responsibilities of Agents and Employees

Agency law is a component of civil law and deals with the legal relationship by which one

person acts on behalf of another. The agent is the person who acts on behalf of

the principal to do something the principal has delegated the agent to do, which the

principal him or herself is legally permitted to do.

The creation of an agency relationship gives rise to both rights and duties of the agent and

the principal, as well as the potential for liability to each other and to third parties.

Principals may be held liable by third parties for the acts of their agents under certain, but

not all, circumstances. The potential liabilities a principal has to third parties for the

agent's acts often depend on whether the agent is an employee or an independent

contractor. Principals face potentially more liabilities to third parties for the acts of their

employees than they do for the acts of their independent contractors.

Resources

Agency and Liability

(https://leocontent.umgc.edu/content/scor/uncurated/mba/2218-

mba630/learning-resourcelist1/agency-and-liability.html?ou=770958)

© 2023 University of Maryland Global Campus

All links to external sites were verified at the time of publication. UMGC is not responsible for the validity or integrity

of information located at external sites.

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International Legal Challenges File

Notice: Contains Confidential Information

The vice president is concerned that the company is undertaking a number of

international projects without a complete understanding of the risks that such activities

entail. Specifically, the VP would like further thoughts on the following issues:

1. In one case, a subsidiary of Colossal Corporation has negotiated a contract that calls

for any disputes to be settled in the courts of Zintar, a relatively small African

country that supplies raw materials for some of Colossal's European operations. The

VP would like a discussion on the wisdom of this contract provision and thoughts on

possible alternative approaches if the contract were to be renegotiated.

2. In a second case, a Colossal subsidiary in Bartan, an Asian country, wants the

company to enter into a sales contract with a subsidiary there, using the UN

Convention on Contracts for the International Sale of Goods (CISG) as the

controlling law. The VP needs to know the ramifications of this option and decide

whether it is a good idea.

3. Colossal management also needs to know whether arbitration is a good idea for a

dispute resolution provision for both domestic and international contracts and why.

4. The parent company, Colossal Corporation, has been sued in the country of Notso in

South America. The lawsuit claims millions of dollars in damages due to supposed

pollution at a mine that Colossal owned there. Since Colossal has already decided to

exit that country and sold the mine there, the company's regional VP believes there

is no risk if the company is taken to court in Notso. He says that even if Colossal

Course Resource

loses there and a court judgment is rendered against it, there is no danger because

the company will have left the country. The VP needs to know if he is right.

5. Finally, one of Colossal's suppliers in the country of Edfin no longer wants to supply

needed raw materials for Colossal's factories in the United States, unless Colossal

agrees to pay them by opening a letter of credit. Up to now, the company has paid

them after delivery to the United States, which has allowed Colossal to inspect the

quality of the shipments before sending payment. What are the ramifications of

granting Edfin's request?

© 2023 University of Maryland Global Campus

All links to external sites were verified at the time of publication. UMGC is not responsible for the validity or integrity

of information located at external sites.

The Turnip Plaza Hotel

Notice: Contains Confidential Information

Mark Piper was employed for several years as a tour guide at the Turnip Plaza Hotel in

Port Austin, Michigan. Turnip Plaza is one of Colossal Corporation's luxury hotel holdings,

strategically located near Lake Huron's famous Turnip Rock. Over the years, Mark

developed a reputation as one of the most skillful tour guides in Michigan. He would guide

tourists through extreme kayaking, hiking, and camping adventures in and around the

Great Lakes. He was often requested by name by tourists visiting the hotel and was

featured on extreme sports television. His high adventure kayaking tours brought in

significant revenue for the hotel.

One month ago, Mark was approached by Stacey Nguyen, the manager of the Huron

Overnight Inn—a rival company of Turnip Plaza. Stacey offered Mark a substantial salary

increase to leave Turnip Plaza and come to work for her. Mark agreed to think about this

offer and get back to Stacey in 48 hours. When he returned to Turnip Plaza, he asked

several of his colleagues what they thought about the offer. One of them immediately

went to Turnip Plaza's manager, Edward Griffin, and told him the details of Stacey's offer

to Mark.

Upon hearing of the offer, Edward called Mark into his office and said: "If you stay with

Turnip Plaza, I promise that next month you will receive a promotion with a 50 percent

raise and a guaranteed contract for a two-year term." This sounded good to Mark, and he

turned down the offer from Stacey to stay with Turnip Plaza. However, last week, shortly

Course Resource

before Mark was to receive his new contract, he was dismissed from Turnip Plaza because

of corporate restructuring due to concerns about the increased liability risks of managing

high adventure tours through Colossal's hotels. Although Mark has not taken any formal

action at this point, the vice president is concerned that Mark might try to hold Turnip

Plaza to Edward's promise.

Your task is to research the legal and ethical issues associated with this situation and write

a report to the vice president answering the following questions:

1. What legal theories might Mark use to try to legally enforce Edward's promise?

Explain the elements of these theories and how they apply to the facts of this

scenario.

2. If Mark were to file a lawsuit and win, what sort of damages or other remedies might

he be entitled to? Include your reasoning and any evidence that led you to your

conclusions.

3. Finally, regardless of the legal implications, the vice president would like your view

on the ethical issues. Does Turnip Plaza have an ethical obligation to fulfill the

promise made by Edward to Mark? Is it right to lay off Mark under these

circumstances? What should Turnip Plaza do from an ethical perspective? Use ethical

theory and principles to analyze these questions.

© 2023 University of Maryland Global Campus

All links to external sites were verified at the time of publication. UMGC is not responsible for the validity or integrity

of information located at external sites.

Learning Topic

Contract Remedies The US legal system is a common-law system, a type of system that originated in England

after the Norman conquest of 1066 CE. The rulers of England, including William the

Conqueror and his progeny, took measures to unify the country. One of the measures they

took was to establish king's courts, which sparked the beginning of a body of common

law, or generally applicable rules of law, throughout England and, eventually, its colonies.

Over time, the common law was brought to America through English colonization, and the

system of common law was adopted by the Founding Fathers of the United States.

In medieval English times, one could seek different remedies in different

courts. Remedies, broadly construed, are the legal method by which rights are enforced or

wrongs redressed. In medieval English times, king's courts resolved disputes by issuing an

award of compensation to injured parties, often in the form of land, valuable property, or

money. The king's courts eventually became known as courts of law, and the awards of

compensation, remedies at law. Remedies at law, today, are mostly issued in the form of

monetary amounts called damages, and are awarded through court orders.

It became apparent during the medieval period that there was sometimes no adequate

remedy at law available to resolve a dispute, and so, over time, chancery courts, also

known as courts of equity, were established. The remedies available in the courts of equity

(called remedies in equity or equitable remedies) were non-monetary remedies, including

specific performance, rescission, reformation, and injunction.

During the medieval period and still today, equitable remedies are typically available to

the injured party only when remedies at law (e.g., monetary damages) are inadequate for

resolving a dispute. Over time, and particularly during the nineteenth century, most states

in United States adopted rules to combine the traditional courts of law and courts of

equity, streamlining the process by making injured parties capable of seeking both

monetary and equitable remedies in the same court.

Remedies are available for victims of breach of contract. When one party to a contract

does not fulfill his or her 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. Today, in the United States, the remedies available for breach of contract

include both remedies at law (damages), and equitable remedies, and in most states, these

remedies may be sought simultaneously in the same court. When there is a valid and

enforceable contract, monetary and equitable remedies may be available.

Even when there is not a valid and enforceable contract, in some cases, remedies may be

sought under other common-law theories, such as promissory estoppel, or pursuant to

theories of quasi-contract. The following decision tree explains how contract remedies

work in tandem with noncontract remedies.

Contract Remedy Decision Tree

As the decision tree shows, when there is a valid and enforceable contract, then monetary

and equitable remedies may be sought. If there is not a valid and enforceable contract,

then one should ask if a promise has been made in order to determine the appropriate

theory to use. If a promise has been made, then one may seek a remedy under the theory

of promissory estoppel. If a promise has not been made, then one may seek a remedy

under the theory of quasi-contract. If there might be a contract, but this is not certain,

then one may seek relief in the alternative (by requesting the court to determine if there is

a contract and, if so, to issue contract remedies; or, if not, to issue noncontract remedies).

Thus, even if no valid and enforceable contract exists, there is still the potential,

depending on the circumstances, for the injured party to seek remedies.

Transcript

Resources

Breach of Contract

(https://leocontent.umgc.edu/content/scor/uncurated/mba/2218-

mba630/learning-resourcelist1/breach-of-contract.html?ou=770958)

Licenses and Attributions

The video Promissory Estoppel has been adapted with permission from Jason M. Gordon.

© 2016, Business Professor, Inc

© 2023 University of Maryland Global Campus

All links to external sites were verified at the time of publication. UMGC is not responsible for the validity or integrity

of information located at external sites.

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