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Posted: October 23rd, 2023
Assignments & Exams Course: Contracts: PLG-102-2310 Assignment: Assignment 5 (based on classes 14 and 15)
Joe is a short-order chef and has always dreamed of owning his own burger joint. After years of waiting, the opportunity arrived when he heard that Burgers-R-Us, a national fast food chain, was planning to open a franchise in his town of Manitoba City, in the state of New Manitoba.
After several months of negotiations, Joe has signed a contract with Burgers-R-Us, and is now the proud franchisee of a store that is scheduled to open on the second Friday in January.
In preparation for the opening, Burgers-R-Us has furnished Joe’s store with kitchen equipment, tables and seating, lighting and signage for inside and outside the store. Joe has purchased aprons, hats and latex gloves ($3,347.68) for his staff and “Grand Opening” banners for outside ($1,026.59). He placed advertisements in the local Pennysaver magazine and in the Manitoba Gazette to hire cooks, cashiers, waiters and cleaning staff ($1,375); the ads are running for four consecutive weeks. He hasn’t hired anyone yet, but has interviewed several potential candidates. Joe also gave BRU a deposit of $17,000 to secure his rights.
In consultation with his accountant, Joe has projected that in his first six months, he will have an operating loss of $23,000, but that by the end of his first year he will show operating profits of $78,000 for the year and that he will be profitable each year thereafter. These estimates are based on what Joe has been able to find in newspaper articles for other types of franchises in other cities. He has no specific numbers relating to his own franchise.
Six weeks prior to the scheduled grand opening, Burgers-R-Us notifies Joe that new market research has shown that the franchise is not likely to be successful in Manitoba City and the franchise contract is hereby cancelled. Outraged, Joe sues Burgers-R-Us in New Manitoba state court for breach of contract.
Discuss what types of damages Joe may claim, which types is he likely to be awarded and what amounts he is likely to be awarded. Be sure to thoroughly explain your answers.
An IRAC essay is not necessary.
Damages in Franchise Agreement Disputes
When franchise agreements are breached, the non-breaching party often seeks monetary damages to compensate for losses. This paper examines the types of damages that may be claimed by Joe, a franchisee, against the franchisor Burgers-R-Us in the given hypothetical scenario.
Expectation damages aim to put the non-breaching party in the position they would have been in had the contract been fulfilled (Fuller and Perdue, 1936). In this case, Joe can reasonably expect lost profits for the first six months of operating the franchise, as projected by his accountant to be $23,000. He may also claim the $78,000 in profits expected in the first year. While long-term lost profits beyond one year may be difficult to prove with certainty, short-term projections seem reasonably foreseeable (McGregor, 2022).
Reliance damages reimburse a party’s expenditures made in reliance on the contract (Farnsworth, 1990). Joe spent $3,347.68 on staff uniforms and $1,026.59 on banners. He also paid $1,375 for job advertisements. These preparation costs were reasonably incurred, so reliance damages would cover them.
Restitution aims to restore any benefits received under a contract (Burrows, 2012). Here, Burgers-R-Us received a $17,000 deposit from Joe without providing the franchise. Restitution of this deposit amount would be appropriate.
In summary, if litigated Joe could reasonably expect compensation including lost profits for six months and a year, as well as reliance damages to reimburse preparation costs. Restitution of the deposit would also be likely awarded (Furmston, 2021). This analysis examines the damages standards and how they may apply to the facts of this hypothetical franchise dispute.
Burrows, A. (2012). Remedies for Torts and Breach of Contract. Oxford University Press.
Farnsworth, E. A. (1990). Contracts (3rd ed.). Little, Brown.
Fuller, L. L., & Perdue, W. R. (1936). The Reliance Interest in Contract Damages: 1. Yale Law Journal, 46(1), 52-96. https://doi.org/10.2307/793012
Furmston, M. P. (2021). Cheshire, Fifoot & Furmston’s Law of Contract. Oxford University Press.
McGregor, H. (2022). McGregor on Damages. Thomson Reuters.
Assignments & Exams Course: Legal Research, Writing & Civil Litigation: PLG-108-2309 Assignment: Assignment 2 (based on classes 2-4)
Please find all of the following cases on Lexis.
1) State for each case whether it is still good law and explain your reasoning; and
2) upon which (if any) court or courts the case is binding authority and explain your reasoning.
a. Horn v. Banks, 536 U.S. 266 (2002). b. People v. Sirico, 17 N.Y.3d 744 (2011) c. Brewer v. Brewer, 2009-Ohio-249 (Ct. App.) d. Keeler v. Superior Court, 2 Cal. 3d 619 (1970)
a. Horn v. Banks, 536 U.S. 266 (2002): This case remains good law. As a decision by the U.S. Supreme Court, it is binding authority on all lower federal and state courts. The Supreme Court’s rulings set precedent that must be followed by other courts.
b. People v. Sirico, 17 N.Y.3d 744 (2011): This case from the New York Court of Appeals remains good law. As the highest court in New York, its rulings are binding authority on all lower state courts in New York.
c. Brewer v. Brewer, 2009-Ohio-249 (Ct. App.): This case from an Ohio appellate court remains good law. As an intermediate appellate court, its rulings are binding precedent on lower trial courts within its appellate district but not on courts in other districts or the state supreme court.
d. Keeler v. Superior Court, 2 Cal. 3d 619 (1970): This case remains good law. As a decision from the California Supreme Court, it is binding authority on all lower state courts in California. The state high court is the final arbiter of state law.
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