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LEG500 WEEK 4 DISCUSSION

Post ID: 3261891

Overview

Week 4 Discussion - Contract Law

Refer to Chapter 11 and Chapter 12 in your course textbook for this discussion.

Respond to the following:

  • Explain the required elements for a valid contract. What are some similarities and differences between common law contracts versus the Uniform Commercial Code?
    • Why is it important to distinguish which one applies when making a contract business decision?
  • Research one (1) breach of contract lawsuit using the legal database, NEXIS-Uni, involving two businesses within the last year and explain the lawsuit facts, dispute, and decision/reasoning by the court. See the link for the database here: NEXIS-Uni Legal Database.

Be sure to respond to one of your classmates' posts. Please provide answers to the discussion questions that are researched, informed, and substantiated by citing sources following Strayer Writing Standards.

CLASSMATE POST:Hello Class,

The required elements for a valid contract are the following:

  • Offer: This is between the offeror and the offeree. The offer must explain proper intent, which will detail a specific offer for something in return and will include important documents, signatures and a check. The offer shows that they are passed the negotiation stage. (1)
  • Acceptance: This is an offeree's acceptance of offeror's proposal. The only ones authorized to accept are the offer are those whom the offer has been made to.
  • Consideration: This is what clarifies what the offeror and offeree is giving up under the contract for exchange. (1)
  • Defenses: This describes an event or term that can turn a valid contract into an invalid one. This includes capacity, misrepresentation, fraud, duress, illegality and undue influence. (1)

The similarities and differences between common law contracts versus the Uniform Commercial Code are:

  • Similarities: They both have the basic requirements needed in order to form a contract. (1)
  • Differences: Common law does not have uniformity, meaning that states do not all follow the same case decisions on contract law. Therefore different sets of rules can be applied depending on the state. The UCC contract applies to all states except Louisiana in regards to the sale of goods. (1)

One breach of contract lawsuit, involving two businesses that I found within the last year was between a franchisor and former franchisee, Snap Fitness v Scenic City Fitness.

Lawsuit facts:

  • Snap Fitness entered into a ten year franchise agreement with Blankenship, Jr and his father in 2016.(2) The following year, the Blankenship's changed their health club to the name Scenic Fitness, while in the same location. (2)
  • The contract does include cover language regarding the fact that they may not own, operate, lease or franchise or engage with another fitness club. If they decide to breach contract and terminate agreement, they must have first provided a 60 day notice to allow Snap Fitness to cure the breach. (2)
  • On June 21, 2024, defendant's sent Snap Fitness a "notice of termination". The defendant's claim they were owed 9,188 by Snap Fitness. (2)
  • On June 24, 2024, Snap Fitness paid the defendant's 6,400, which is the amount they believed they were due, as a result of the defendant's not some franchise fees and failed to update billing information used for payments.(2)
  • As a result, defendant's decided to rebrand and open their own gym to help them start collecting revenue directly. (2)
  • A few days later they announced Scenic City Fitness on Facebook and advised clients that they would only experience changes in branding but no negative impacts to billing, and open 24/7. (2)
  • The rebranding they promoted showed the Scenic City Fitness label breaking through the Snap Fitness old label with statement, "Same Great Gym Now More Local". (2)
  • On July 3, 2024, Snap Fitness sent a cease and desist letter to Scenic City, asking them to stop from operating a competitive business and stop using unauthorized use of Snap Fitness trademarks or confidential property. Plaintiff's advised that their was no breach on their end of contract due to payments and even if there was, they were not provided 60 days to cure the allegation.(2)
  • On July 12, 2024, the defendants responded with a letter requesting smooth transfer of memberships and that plaintiffs not with hold funding or payouts. In addition, requesting that they are left alone to operate their gym independently. (2)
  • On July 17, Snap Fitness sent defendants a notice of termination letter with notices of defaults on abandonment, unauthorized use of confidential information, in-term division of club members and impairment of trademarks and the opportunity to provide a cure breach of contract within the 60 days of the defendants notice of termination. (2)
  • Due to no action by defendants, plaintiff sent emails to existing members going to defendants location advising them of their termination of membership, effective July 22. (2)

Dispute: The fact that Blankenship changed their health club to Scenic Fitness while under the ten year franchise agreement, the plaintiff Snap Fitness if suing Scenic Fitness for breach of multiple components on the contract. (2)

Decision by the court:

  • The court was in favor of the plaintiff. Whereas, it was proven that the defendants did breach their contract and as a result were ordered to cease operations of their fitness club at or within 10 miles of Snap Fitness. In addition, should stop using trademarks or tradenames, service marks and other symbols that infringe upon Snap Fitness. They were also order to stop using confidential information such as member information and return on proprietary information such as manuals and stop using Snap Fitness franchise contact number as a reference for their current gym. Snap Fitness was also granted the rights to assume the lease, utilities and all membership contracts in compliance with contract. Plaintiffs were allowed to post a bond for $25,000. (2)

-Daisy

Sources:

  1. Jennings, M. M. (2021). Business: Its Legal, Ethical, and Global Environment (12th ed.). Cengage Learning US. https://strayer.vitalsource.com/books/9798214338873Links to an external site.
  2. Nexis Uni. October 18, 2024. Snap Fitness, Inc. v. Scenic City Fitness, Inc., 2024 U.S. Dist. LEXIS 189651. https://advance-lexis-com.libdatab.strayer.edu/document/?pdmfid=1519360&crid=d13b6884-0283-4320-ac7e-fe48ebc36314&pddocfullpath=%2Fshared%2Fdocument%2Fcases%2Furn%3AcontentItem%3A6D71-YJY3-RT36-304K-00000-00&pdcontentcomponentid=6418&pdshep.