Chapter 15

Question 2

Green was the owner of a large department store. On Wednesday, January 26, he talked to Smith and said, “I will hire you as sales manager in my store for one year at a salary of $48,000; you are to begin work next Monday.” Smith accepted and started work on Monday, January 31. At the end of three months, Green discharged Smith. On May 15, Smith brings an action against Green to recover the unpaid portion of the $28,000 salary. Is Smith’s employment contract enforceable? Explain.

Question 16 (Case problem)

David and Nancy Songer planned to travel outside the United States and wanted to acquire medical insurance prior to departure. They spoke with an agent of Continental who requested that Nancy Songer undergo a medical examination based on a statement that she had a heart murmur. She promptly complied, and the Songers later met with the agent to complete the application. David Songer signed the application and tendered a check for the first six months’ premium. The Songers also claim that the agent stated that a “binder” was in effect such that policy coverage was available immediately. The agent subsequently denied making this statement, relying, instead, on a clause in the contract that required home office acceptance. The Songers left the United States and sixty days later inquired as to the status of their application. At approximately the same time, Continental denied the application and sent a refund to the Songers. Nancy Songer was then severely injured in an automobile accident. When Continental refused to honor the policy, the Songers claimed that the oral representation constituted part of the contract due to the vagueness of the policy “acceptance” language. Is the evidence regarding the oral representations admissible? Why or why not?

Chapter 16

Question 3

Anne, who was unemployed, registered with the Speedy Employment Agency. A contract was then made under which Anne, in consideration of such position as the Agency would obtain for her, agreed to pay the Agency one-half of her first month's salary. The contract also contained an assignment by Anne to the Agency of one-half of her first month's salary. Two weeks later, the Agency obtained a permanent position for Anne with the Bostwick Co. at a monthly salary of $1,900. The agency also notified Bostwick of the assignment by Anne. At the end of the first month, Bostwick paid Anne her salary in full. Anne then quit and disappeared. The Agency now sues Bostwick Co. for $950 under the assignment. Who will prevail? Explain.

Question 13(Case problem)

Northwest Airlines leased space in the terminal building at the Portland Airport from the Port of Portland. Crosetti entered into a contract with the Port to furnish janitorial services for the building, which required Crosetti to keep the floor clean, to indemnify the Port against loss due to claims or lawsuits based upon Crosetti's failure to perform, and to provide public liability insurance for the Port and Crosetti. A patron of the building who was injured by a fall caused by a foreign substance on the floor at Northwest's ticket counter brought suit for damages against Northwest, the Port, and Crosetti. Upon settlement of this suit, Northwest sued Crosetti to recover the amount of its contribution to the settlement and other expenses on the grounds that Northwest was a third-party beneficiary of Crosetti's contract with the Port to keep the floors clean and, therefore, within the protection of Crosetti's indemnification agreement. Will Northwest prevail? Why or why not?