Case Study Essay

Submitted By SamandNanc
Words: 878
Pages: 4
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1. Charlie Martin should have done the following to avoid the mess and be prepared for the situation at hand.
a. Seek legal counsel to review the terms and the legalese.
b. Negotiate the terms of the contract (stating in the case study, Nell states that PHOCCI backs their franchisee’s 110%).
c. Charlie could have looked into other potential franchises and compare if this is the direction that he would to take.
d. Charlie should have asked another financial analyzer to verify Nell’s projections.
e. Under Section B for the contract, Charlie should have argued against what had been said before the contract was reviewed and requested that some of the support that was mentioned be included. Entire Agreement Clause.
f. Charlie should have secured the finances before signing the contract to ensure that he would be able to make the payments stipulated.

2. According to the 3rd edition of Canadian Business and the Law, its states that a standard form contract is a ““Take it or leave it” contract, where the customer agrees to a standard set of terms that favours the other side.” For Charlie’s case, it certainly did favour the other side in regards to paying royalties and fees. PHOCCI uses this type of contract because they have a set of standards that need to be met by the franchises in order to use the company name and reputation. Using a standard form contract helps reduce the transaction costs and helps increase business volume – potentially lowering prices/costs to the business.

3. We believe there was a valid contract because of the following reasons.
a. The offer was made by Nell who represented PHOCCI, and Charlie accepted it, with the hopes of making a profit based on the misrepresentation of the information.
b. Consideration was there. PHOCCI was receiving a one-time payment of 75,000, and an ongoing payment of 5% of gross weekly sales and 5% gross weekly sales to a marketing fund in exchange for Charlie using PHOCCI services to conduct his own business.
c. Even though Charlie was not smart enough to read the fine print, he was not intoxicated, insane, or underage. Therefore, he is a competent person, and PHOCCI is as well.
d. Genuineness of Consent was there since he was willing to carry out the terms set by PHOCCI in the contract.
e. Legal Purpose is there because it is for business purposes.

4. Yes. The contract was breached by Charlie because he became delinquent on payments. Charlie tried to get an extension for the payments, and PHOCCI honored that, even though they had stipulated in the contract that he had a maximum of 2 weeks to pay. After the 2 weeks passed, PHOCCI had the right to take legal action.

5. PHOCCI has to prove that Charlie did not pay, and they can do that by showing the unpaid balance on their accounts receivable and they last payment that Charlie made to them, along with the contract that he signed, and the testimonies by both Nell and the people she consulted with. This could hurt Charlie because PHOCCI gave Charlie additional time, proving that it’s a longer period than before, that he would not pay even then. We believe that PHOCCI has proven their point on a scale of probabilities.

6. Oral family contracts are not considered by the court unless they
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