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Contracts

Exam 13
30 minutes

Fact Pattern

Assistant has worked at Papers, Inc. for five years. He began as a general assistant, helping all sales staff with any minor administrative tasks. Soon, however, his excellent work caught the attention of VP, vice president of the sales department. One year into Assistant’s tenure at Papers, Inc., VP promoted Assistant to be his own personal administrative assistant. 

Accordingly, Assistant works very closely with VP, providing any administrative support work that VP requires. Because VP is now Assistant’s only supervisor, Assistant’s yearly bonus, salary increases, and continued employment all depend on VP’s satisfaction with Assistant’s performance. 

Although VP and Assistant work very closely together, they typically do not socialize outside the workplace. At work, however, VP has mentored Assistant and advised him how to ascend the ranks within Papers, Inc. Also, shortly after Assistant started working directly for VP, Assistant asked VP for his opinion regarding the retirement plans available from Papers, Inc. Since then, VP has also regularly provided Assistant with financial advice. 

Because they have previously socialized only at work, Assistant is surprised and a bit intimidated when, one Friday night, VP invites him to dinner. When they arrive at the restaurant, the wait for a table is about 45 minutes, so VP suggests that they wait at the bar. There, VP buys a first round of martinis, so Assistant offers to buy a second round. VP declines, but Assistant has a second martini. Once the two are seated, VP buys a bottle of wine to share; both have two glasses. 

As they eat dessert, VP says that the reason he invited Assistant to dinner is to offer some financial advice. Specifically, VP has recently become aware of an investment opportunity that he believes is well-suited for Assistant: selling aromatherapy candles from home. VP spends the next half hour telling Assistant all about the program, which VP touts as an easy way to earn money in one’s spare time with little commitment. 

VP then presents to Assistant a contract to enroll in the program. Under the terms, Assistant agrees to purchase, from VP, a start-up kit of aromatherapy candles for $1,000. Assistant can then sell the candles, retaining for himself 75 percent of the proceeds (he had to give 25 percent of his proceeds to VP, his sales lead). Assistant is a bit surprised that VP is involved in such a program, but because he holds a high opinion of VP’s financial acumen, he signs the contract. 

The next morning, however, Assistant intensively researches both the contract and the company administering the program. This research convinces Assistant that he will probably not even recoup his initial $1,000 investment, let alone turn a profit. He emails VP, stating that he regrets signing the contract and would appreciate if VP were to rip up the agreement. VP responds that, under the contract, he is due $1,000 for the start-up kit within two weeks, and will sue Assistant for breach of contract if Assistant does not pay him. Assistant never pays, so VP sues him.


Questions

  1. Is it relevant to the enforceability of the contract that Assistant drank alcohol before and during the dinner at which Assistant signed the contract? Explain.
  2. Is it relevant to the enforceability of the contract that Assistant works for VP and has previously received financial advice from VP? Explain.

Question 1

Is it relevant to the enforceability of the contract that Assistant drank alcohol before and during the dinner at which Assistant signed the contract? Explain.

Question 2

Is it relevant to the enforceability of the contract that Assistant works for VP and has previously received financial advice from VP? Explain.

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