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IRAC Brief Contract Law – week 4

IRAC Brief Contract Law

Business managers should be aware of contract law cases and the court decisions that set precedents in this area of law. Business entities enter into contracts very frequently. Some are long term contracts and some more immediate. Thus, understanding the nature of contracts, possible remedies, and contracts case laws, is an essential skill for every manager. To further our understanding of contact law, Learning Team B, will brief the case of Alba v Kaufmann, a contract law case, using the IRAC method; identifying the issue, rule, analysis and conclusion of the case. After briefing the case, we will summarize the team’s discussion about the case.

Issue

The issue before the court in the Alba v Kaufmann is whether specific performance should be the applicable remedy in the case of a breached real estate contract. The Albas made an offer of the asking price on a property being sold by Mr. Kaufmann which was accepted, and a purchase or sale contract was entered. The Albas had secured the necessary loans, inspections, etc. and were then informed by Mr. Kaufmann’s wife that the property was no longer for sale. The Albas were seeking specific performance as a remedy for the breach of contract. The court explained that there were two questions raised regarding the enforceability of specific performance as a remedy in this case. The first question was whether there was equitable remedy available because the property was not unique at all. The second question was whether the specific performance remedy would cause an undue hardship to the defendant.

The court had to consider the argument by the defendant that “there are many similar properties for sale in and around Rensselaer County,” (Alba v Kaufmann, 2006), perhaps eliminating the uniqueness of the property so as to make equitable remedy available. Additionally, the court considered the argument that the sale of the property would cause an undue hardship for the seller and his family, as Ms. Cacace, Mr. Kaufmann’s wife claimed such sale would exacerbate her illness (Alba v Kaufmann, 2006). Thus, the court had to decide how these factors, the uniqueness of the property and the “hardship” to the seller, would preclude the specific performance remedy.

Rule

Specific performance requires that the party that fails to complete his or her side of the contract is to be ordered by the court to complete the contract. “Specific performance is a remedy awarded in cases in which the subject matter is unique, such as in contracts involving land, heirlooms, and paintings,” (Cheeseman, 2016, p. 239). Specific perfromance is usually used when no other award, no amount of monetary damages, would leave the non-breaching party in the same position as if the contract had been carried out. Collins Law Dictionary defines specific performance as “an equitable remedy for breach of contract where damages are felt to be an inadequate remedy…most often encountered in the context of contracts for the sale and purchase of land,” (2006). Before awarding specific performance, courts also examine whether the execution of the original contract terms would result in an undue hardship to either party. Cases such as this one, where the fullfillment of the contract might cuase a hardship to either party, the courts may seek alternative remedies.

Analysis

The court considered the facts and arguments presented. As to the uniqueness of the subject matter to determine if specific performance would be an applicable remedy, the court anlayzed the argument presented by defense. The defense argued there were many other comparable properties listed for sale in the same area as this specific property. The defendants, however, did not present any listings showing such offerings in the current area. The court deternined, even if there were other parcels for sale nearby, each parcel is unique in its own way.

Next, the court had to consider whether selling the property would cause undue hardship to Mr Kaufmann and thus force the court to award something other than specific performance. The court analyzed the defense’s argument that Mr. Kaufmann would face hardship as a result of his wife’s health complications, which were in part due to the sale of the property. The court found that there was insufficient evidence that Mr. Kaufmann’s illness would be exacerbated by the sale of the property. Moreover, the court found that the hardship, if substantiated would be to a person who was not a party to the contract.

Case Conclusion

The appellate court reversed the lower court’s decision. The court first looked at the allegation that the property was not unique and therefore the breach of contract would not subject to specific performance remedies. The court decided the property was indeed unique as most parcels of land are. Secondly, the court concluded the argument of hardship was not applicable because the hardship was not on Mr. Kaufmann but rather on his wife who was not a party to the contract. The court ordered specific performance was an applicable remedy for this contract breach.

Discussion

The team had a discussion regarding the case and the court’s decision and team members unanimously agreed with the decision of the court. Case law dictates that specific performance is the usual remedy for cases involving real estate property. Pieces of real estate are unique in their own way and trying to establish an equitable remedy for breach of a real estate contract becomes difficult. This is because of the uniqueness of property parcels. It was a tough case but we seem to agree that although the defendant brought his argument forward, the law was clearly on the plaintiff’s side. All future real estate contracts would have a huge impact if the court simply ruled otherwise.

Conclusion

In conclusion, after briefing Alba v Kaufmann, and discussing the case amongst ourselves, Learning Team B agrees with the court’s ruling. More importantly, the team has gained a deeper understanding of contract law. We learned the applicable instances for specific performance remedy and we understand the other types of remedies available when there is a breach. Contracts are an important part of business, and through the briefing and discussion of this case the team enhanced their understanding of the complexities of contract law cases and the possible remedies for breaches.

References

Alba v Kaufmann. (2006, March 2). 2006 NY Slip Op 01438 [27 AD3d 816]. New York State Law Reporting Bureau. Retrieved June 15, 2018 from:http://www.nycourts.gov/reporter/3dseries/2006/2006_01438.htm

Cheeseman, H. (2016). Legal Environment of Business; Online Commerce, Business Ethics, and Global Issues (8th Edition). Upper Saddle River, NJ: Pearson Education. Retrieved from: https://phoenix.vitalsource.com/#/books/9781323463390/cfi/6/4!/[email protected]:0

New York State Law Reporting Bureau pursuant to Judiciary Law

http://www.courts.state.ny.us

specific performance. (2006). In W. J. Stewart, Collins dictionary of law (3rd ed.). London, UK: Collins. Retrieved from https://search-credoreference-com.contentproxy.phoenix.edu/content/entry/collinslaw/specific_performance/0

Case Study 1 Pay Decisions at Performance Sports

Katie Perkins’s career objective while attending Rockford State College was to obtain a degree in small business management and to start her own business after graduation. Her ultimate desire was to combine her love of sports and a strong interest in marketing to start a mail-order golf equipment business aimed specifically at beginning golfers. After extensive development of a strategic business plan and a loan in the amount of $75,000 from the Small Business Administration, Performance Sports was begun. Based on a marketing plan that stressed fast delivery, error-free customer service, and large discount pricing, Performance Sports grew rapidly. At present the company employs 16 people: eight customer service representatives earning between $11.25 and $13.50 per hour; four shipping and receiving associates paid between $8.50 and $9.50 per hour; two clerical employees each earning $8.25 per hour; an assistant manager earning $15.25 per hour; and a general manager with a wage of $16.75 per hour. Both the manager and assistant manager are former customer service representatives. Perkins intends to create a new managerial position, purchasing agent, to handle the complex duties of purchasing golf equipment from the company’s numerous equipment manufacturers. Also, the mail-order catalog will be expanded to handle a complete line of tennis equipment. Since the position of purchasing agent is new, Perkins is not sure how much to pay this person. She wants to employ an individual with five to eight years of experience in sports equipment purchasing. While attending an equipment manufacturers’ convention in Las Vegas, Nevada, Perkins learns that a competitor, East Valley Sports, pays its customer service representatives on a pay-for-performance basis. Intrigued by this compensation philosophy, Perkins asks her assistant manager, George Balkin, to research the pros and cons of this payment strategy. This request has become a priority because only last week two customer service representatives expressed dissatisfaction with their hourly wage. Both complained that they felt underpaid relative to the large amount of sales revenue each generates for the company.

Questions

1. What factors should Perkins and Balkin consider when setting the wage for the purchasing agent position? What resources are available for them to consult when establishing this wage?

2. Suggest advantages and disadvantages of a payfor-performance policy for Performance Sports.

3. Suggest a new payment plan for the customer service representatives.

Case Study 2 Evaluate the Work-Life Climate in Your Company

What is the quality of the work-life environment in your company? The following survey provided by the Work and Family Connection will help provide a “case analysis” of the climate in your organization. Answers to the 20 questions will provide clear insights about your company’s position in the work-life area. Agree or Disagree with the Following Statements:

1. My manager or supervisor treats my work-life needs with sensitivity.

2. It is usually easy for me to manage the demands of both work and home life.

3. My career path at this company is limited because of the pressure of home life demands.

4. My job at this company keeps me from maintaining the quality of life I want.

5. My manager or supervisor is supportive when home life issues interfere with work.

6. My manager or supervisor focuses on results, rather than the time I am at my desk.

7. My manager or supervisor has a good understanding of flexible work hour practices.

8. If I requested a flexible work arrangement, my manager or supervisor would support me.

9. My manager or supervisor is often inflexible or insensitive about my personal needs.

10. I believe my manager or supervisor treats me with respect.

11. My manager or supervisor allows me informal flexibility as long as I get the job done.

12. My manager or supervisor tends to treat us like children.

13. My manager or supervisor seldom gives me praise or recognition for the work I do.

14. My manager or supervisor seems to care about me as a person.

15. I would recommend this company to others.

16. The work I do is not all that important to this company’s success.

17. If I could find another job with better pay, I would leave this organization.

18. If I could find another job where I would be treated with respect, I would take it.

19. If I could find another job where I could have more flexibility, I would take it.

20. I am totally committed to this company. For a perfect score, you should answer “Disagree” to questions 3, 4, 9, 12, 13, 16, 17, 18, and 19 and “Agree” to all the rest, 1, 2, 5, 6, 7, 8, 10, 11, 14, 15, and 20. To score, begin by giving yourself 20 points. Then deduct one point for every “wrong” response from the total score. If your score is 18 to 20: Congratulations! Your organization is leading the nation in flexibility and supportiveness. If your score is 14 to 17: Your organization is probably more supportive and flexible than most, but you have room to grow. If your score is 11 to 13: You could be open to other job offers in the race for talent among employees. If your score is 10 or less: Your managers will need help to manage the twenty-first-century workforce.

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