Sun, Jan
0 New Articles

Business Ethics 2016 - Case Study Guides (9) - Formation and Requirements of Contracts

Business Ethics 2016


Case study guides and online resources (2016)





Chapter 9


Formation and Requirements of Contracts



VII. Answers to Critical Legal Thinking Cases


9.1   Agreement

Yes. The U.S. Court of Appeals held that the general release that Maureen Marder signed with Paramount Picture Corporation for the use of her life story for the movie Flashdance was an enforceable contract. The court stated, “The Release’s language is exceptionally broad and we hold that it is fatal to each of Marder’s claims against Paramount.” Such a release of “each and every claim” covers all claims within the scope of the language. Accordingly, the law imputes to Marder an intention corresponding to the reasonable meaning of her words and acts. Thus, the only reasonable interpretation of the release is that it encompasses the various copyright claims she asserts in her lawsuit against defendants Paramount Pictures Corporation, Sony Music Entertainment, and Jennifer Lopez. The court concluded, ”Though in hindsight the agreement appears to be unfair to Marder—she only received $2,300 in exchange for a release of all claims relating to a movie that grossed over $150 million—there is simply no evidence that her consent was obtained by fraud, deception, misrepresentation, duress, or undue influence.” The U.S. Court of Appeals held that the general release that Maureen Marder signed with Paramount Picture Corporation for the use of her life story for the movie Flashdance was an enforceable contract and Marder’s lawsuit was therefore dismissed. Marder v. Lopez, 450 F.3d 445, 2006 U.S. App. Lexis 14330 (United States Court of Appeals for the Ninth Circuit, 2006)


9.2   Mirror Image Rule


No. The court of appeal applied the mirror image rule and held that no contract had been created between the parties. The court stated, “Florida employs the ‘mirror image rule’ with respect to contracts. Under this rule, in order for a contract to be formed, an acceptance of an offer must be absolute, unconditional, and identical with the terms of the offer.” The court examined the facts of the case and found the following. Norma English made an offer to purchase a house owned by Michael and Lourie Montgomery (Montgomery) for $272,000, which included the purchase of some personal property of Montgomery, including paving stones and a fireplace screen worth $100. Montgomery then made a counteroffer whereby they made many changes to English’s offer, including deleting the paving stones and fireplace screen from the personal property that English wanted. When English replied, she accepted all of Montgomery’s changes except that she did not accept Montgomery’s change that deleted the paving stones and fireplace screen from the deal. Therefore, when Montgomery was selling their house to another buyer for $285,000, English sued and asked the court to find that an enforceable contract existed between Montgomery and her and to order Montgomery to specifically perform the contract. However, the court applied the mirror image rule and held that English had not accepted Montgomery’s counteroffer, so no contract existed between them. Montgomery was free to sell their house to another purchaser. The court concluded, “Applying the mirror image rule to these undisputed facts we hold that, as a matter of law, the parties failed to reach an agreement on the terms of the contract and, therefore, no enforceable contract was created.” Montgomery v. English, 902 So.2d 836, 2005 Fla. App. Lexis 4704 (Court of Appeal of Florida, 2005)


9.3   Illegal Contract

Yes. The appellate court held that the partnership agreement between Parente and Pirozzoli was an illegal contract and was therefore void and unenforceable. The partnership was formed for an illegal purpose, which was to obtain a liquor license for a bar in Pirozzoli’s name without disclosing to the state liquor commission that issued the license that Parente was also an owner of the business. If Parente’s prior criminal record had been disclosed to the liquor commission, the bar would not have been issued a liquor license. The court stated, “Here, the partnership agreement was not offensive on its face, but had an illegal, ulterior purpose, namely, to evade the strictures of the liquor control laws. Because the partnership agreement was made to facilitate, foster, or support patently illegal activity, we conclude that it is illegal as against public policy….” The court found that the partnership contract had an illegal purpose and refused to enforce the contract. The court left the parties where it found them—Pirozzoli had the liquor license for the business and Parente did not. The court stated, “Although the end result of holding the partnership agreement illegal may be to allow Pirozzoli a windfall at Parente’s expense, this result is common and necessary in many cases in which contracts are deemed unenforceable on the grounds of furthering overriding policies. Knowing that they will receive no help from the courts and must trust completely to each other’s good faith, the parties are less likely to enter an illegal arrangement in the first place.” The appellate court found that Pirozzoli was not liable to Parente, and held that Pirozzoli could keep the $138,000 windfall. Parente v. Pirozzoli, 866 A.2d 629, 2005 Conn. App. Lexis 25 (Appellate Court of Connecticut, 2005)


9.4   Counteroffer

No. A contract to convey the real property does not exist between Heikkila and McLaughlin. A written offer does not evidence a completed contract and a written acceptance is required. Minnesota has applied the “mirror image rule” in analyzing acceptance of offers. Under that rule, an acceptance must be coextensive with the offer and may not introduce additional terms or conditions. Heikkila’s alterations of the Purchase Agreements constituted a rejection of McLaughlin’s offer and constituted a counteroffer. Heikkila withdrew the counteroffer before McLaughlin provided a written acceptance of the counteroffer. Only a written acceptance by McLaughlin of the exact written terms proposed by Heikkila on the Purchase Agreements would have created a binding contract for the sale of land. Without a written acceptance and delivery to the other party to the agreement, no contract was formed. The court of appeals held that because McLaughlin did not sign or otherwise accept in writing Heikkila’s counteroffer, there was no contract for the sale of land between the parties. McLaughlin v. Heikkila, 697 N.W.2d 231, 2005 Minn. App. Lexis 591 (Court of Appeals of Minnesota, 2005)


9.5   Contract

Yes. Dees is bound to the contract. The trial court agreed with Saban Entertainment, Inc., finding that the “Work-for-Hire/Independent Contractor Agreement” was an enforceable contract between the parties. The court held that Dees had transferred his ownership interests in the Mighty Morphin Power Rangers’ logo that he designed to Saban pursuant to an enforceable contract. The Court of Appeals affirmed the judgment in favor of Saban, stating, “The disputed agreement transferred plaintiff’s copyright in the Mighty Morphin Power Rangers’ logo with as much specificity as the law requires.” The Court applied the adage “a contract is a contract is a contract,” at least in this case.

      There seems to be is no equity doctrine that Dees can raise in this case to save him from the contract he signed. He was an adult who choose not to obtain legal representation before he negotiated and signed the contract with Saban. Later developments—the success of the Mighty Morphin Power Rangers—cannot be introduced to change his contract. When Saban signed the contract there was no certainty that the Mighty Morphin Power Rangers would be so successful or that the design Dees provided would work. Dees, d/b/a David Dees Illustration v. Saban Entertainment, Inc., 131 F.3d 146, 1997 U.S. App. Lexis 39173 (United States Court of Appeals for the Ninth Circuit)



VII. Answers to Ethics Cases


9.6   Ethics Case

An illegal contract is one where the object of the contract is unlawful. Courts have held that where a license is required to practice a profession, a person must have that license before providing services covered by the license. If a person does not have the required license, a contract to provide such services to a client is an illegal contract and therefore void and unenforceable. Here, Elena Sturdza was not licensed to provide architectural services in Washington DC. However, she entered into a contract with the United Arab Emirates (UAE), a country in the Middle East, to provide the architectural design for a new embassy to be built in Washington DC, and did provide many architectural services to UAE. Sturdza sued UAE for nonpayment for her architectural services. Here, the court held that Sturdza was not due payment from UAE because the contract between Sturdza and UAE was an illegal contract and therefore void. As a decision based on law, it was the correct decision.

      The UAE could have voluntarily paid Sturdza for her architectural work. But it did not.  Did the UAE act ethically in this case by not paying Sturdza? This is a case where the law is on UAE’s side and stipulates that UAE does not have to pay Sturdza. However, the UAE selected her to provide architectural services, accepted such services, and worked with Sturdza to modify their design. They received the benefit of her work. It seems unethical for the UAE to hire Sturdza and then use the law to avoid making such payments to her. Sturdza v. United Arab Emirates, 11 A.3d 251, 2011 D.C. App. Lexis 2 (District of Columbia Court of Appeals, 2011)


9.7   Ethics Case

The doctrine of equity is applied to deny the enforcement of a contract term, which if doing so, would cause an unfair result. The court applied the doctrine of equity to save the lessees of a motel from their failure to meet the contract term that required them to give three months written notice of their intent to renew the real estate lease on the motel. Here, with the landlord’s knowledge, the lessees made extensive long-term improvements that greatly increased the value of both the property and the business. The landlord knew that the lessees had obtained long-term financing for the improvements that would extend well beyond the first 10-year term of the lease. The landlord also knew that the only source of income the lessees had to pay for these improvements was the income generated from the motel business.

      The court held that in this case, where the lessees had made substantial improvements to a motel they leased from the landlord, the lessees had given oral notice to the landlord prior to the expiration of the required time for the notice that they intended to enforce the option to re-lease the motel, and where written notice was given only thirteen days late, that the doctrine of equity applies to let them renew the lease. The court invoked the doctrine of equity and saved the lessees from their error. The court reasoned that “there is only minimal delay in giving notice, the harm to the lessor is slight, and the hardship to the lessee is severe.” The court granted equitable relief and permitted the late renewal notice.

      The question of whether the landlord acted unethically in this case seems to be easy to answer in this case. Although the express term of the lease was not met—the requirement that the notice to enforce the option of renewal to be in writing—the landlord did have oral notice from the lessees that they would renew the lease. Here, the landlord knew of the lessees’ intent to renew, but asserted the legal issue of their failure to give the notice of renewal in writing within the time stated in the lease. This is a case where the result of applying law or equity differ, and that is preciously where the doctrine of equity can be used to save a party from an unfair result. Romasanta v. Mitton, 189 Cal. App.3d 1026, 234 Cal. Rptr. 729, 1987 Cal. App. Lexis 1428 (Court of Appeal of California)









Free Business Ethics Resources

1. See full list of videos: 

Link 1 - Youtube channel www.youtube.com/ecomftu2012

Link 2 - Youtube channel 

2. Free Business Ethics - 2016 Ebooks (free download)

Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman

REVEL for Ethics and the Conduct of Business -- Access Card, 8th Edition, 2016, John R Boatright, Jeffery D. Smith

Business Ethics: Concepts and Cases, 7th Edition, 2012, Manuel G. Velasquez, Santa Clara University


3. Link to power point slides (Free Download)

REVEL for Ethics and the Conduct of Business -- Access Card, 8th Edition, 2016, John R Boatright, Jeffery D. Smith


Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman


Business Ethics: Concepts and Cases, 7th Edition, 2012, Manuel G. Velasquez, Santa Clara University

4. Test Bank - Free download

Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman

Link - Test bank - free download 

REVEL for Ethics and the Conduct of Business -- Access Card, 8th Edition, 2016, John R Boatright, Jeffery D. Smith

Link - Test bank - free download


For Test Bankz, Quiz Answers and Case study Guides, email to: This email address is being protected from spambots. You need JavaScript enabled to view it.


Good Luck and Success, Enjoy Your Study !






Business Ethics 2016, Lecture, Video, Case Study Guides and Quiz, Test Bank, Free Download
Revel for Ethics and the Conduct of Business, 8th Edition, 2016, John R Boatright, Jeffery D. Smith
Legal Environment of Business: Online Commerce, Ethics, and Global Issues, 8th Edition, 2016, Henry R. Cheeseman
Business Ethics: Concepts and Cases, 7th Edition, 2012, Manuel G. Velasquez, Santa Clara University

1. Ethics in the World of Business
2. Ethical Decision Making
3. Ethical Theories
4. Whistle-Blowing
5. Business Information and Conflict of Interest
6. Privacy
7. Discrimination and Affirmative Action
8. Employment Rights
9. Health and Safety
10. Marketing and Advertising
11. Ethics in Finance
12. Corporate Social Responsibility
13. Governance, Accountability, and Compliance
14. International Business Ethics
Part I: Legal and Ethical Environment

1. Legal Heritage and the Digital Age
2. Ethics and Social Responsibility of Business
3. Courts, Jurisdiction, and Administrative Law
4. Judicial, Alternative, and E-Dispute Resolution

Part II: Constitution and Public Law
5. Constitutional Law for Business and E-Commerce
6. Torts and Strict Liability
7. Criminal Law and Cyber Crimes
8. Intellectual Property and Cyber Piracy

Part III: Contracts, Commercial Law, and E-Commerce
9. Formation and Requirements of Contracts
10. Performance and Breach of Contracts
11. Digital Law and E-Commerce
12. UCC Sales Contracts, Leases, and Warranties
13. Credit, Secured Transactions, and Bankruptcy

Part IV: Business Organizations, Corporate Governance, and Investor Protection
14. Small Business, General Partnerships, and Limited Partnerships
15. Limited Liability Companies, Limited Liability Partnerships, and Special Forms of Business
16. Corporations and Corporate Governance
17. Investor Protection and E-Securities Transactions

Part V: Agency, Employment, and Labor Law
18. Agency Law
19. Equal Opportunity in Employment
20. Employment Law and Worker Protection
21. Labor Law and Immigration Law

Part VI: Government Regulation
22. Antitrust Law and Unfair Trade Practices
23. Consumer Protection
24. Environmental Protection
25. Real Property and Land Use Regulation

Part VII: Global Environment
26. International and World Trade Law

Part VIII: Accounting Profession
27. Accountants’ Duties and Liability
PART ONE Basic Principles

Chapter 1 Ethics and Business
1.1 The Nature of Business Ethics
ON THE EDGE: Was National Semiconductor Morally Responsible?
1.2 Ethical Issues in Business
ON THE EDGE: A Traditional Business
1.3 Moral Responsibility and Blame
ON THE EDGE: WorldCom’s Whistleblower
ON THE EDGE: Gun Manufacturers and Responsibility
Slavery in the Chocolate Industry
Aaron Beam and the HealthSouth Fraud

Chapter 2 Ethical Principles in Business
2.1 Utilitarianism: Weighing Social Costs and Benefits
2.2 Rights and Duties
ON THE EDGE: Should Companies Dump Their Wastes In Poor Countries?
ON THE EDGE: Working for Eli Lilly & Company
ON THE EDGE: Conflict Diamonds
ON THE EDGE: ExxonMobil, Amerada Hess, and Marathon Oil in Equatorial Guinea
Traidos Bank and Roche’s Drug Trials in China

PART TWO The Market and Business

Chapter 3 The Business System: Government, Markets, and International Trade
3.1 Free Markets and Rights: John Locke
3.2 Free Markets and Utility: Adam Smith
3.3 Free Trade and Utility: David Ricardo
3.4 Marx and Justice: Criticizing Markets and Free Trade
ON THE EDGE: Commodification or How Free Should Free Markets Be?
ON THE EDGE: Marx’s Children
3.5 Conclusion: The Mixed Economy, the New Property, and the End of Marxism
ON THE EDGE: Napster’s Lost Revolution
ON THE EDGE: Brian’s Franchise
The GM Bailout Accolade versus Sega

Chapter 4 Ethics in the Marketplace
4.1 Perfect Competition
4.2 Monopoly Competition
ON THE EDGE: Drug Company Monopolies and Profits
4.3 Oligopolistic Competition
4.4 Oligopolies and Public Policy
ON THE EDGE: Fixing the Computer Memory Market
ON THE EDGE: Oracle and Peoplesoft
Intel’s “Rebates” and Other Ways It “Helped” Customers
Archer Daniels Midland and the Friendly Competitors

PART THREE Business and Its External Exchanges: Ecology and Consumers

Chapter 5 Ethics and the Environment
5.1 The Dimensions of Pollution and Resource Depletion
5.2 The Ethics of Pollution Control
5.3 The Ethics of Conserving Depletable Resources
ON THE EDGE: Ford’s Toxic Wastes
ON THE EDGE: The Auto Companies in China
ON THE EDGE: Exporting Poison
The Ok Tedi Copper Mine
Gas or Grouse?

Chapter 6 The Ethics of Consumer Production and Marketing
6.1 Markets and Consumer Protection
6.2 The Contract View of Business Firm’s Duties to Consumers
6.3 The Due Care Theory
ON THE EDGE: The Tobacco Companies and Product Safety
6.4 The Social Costs View of the Manufacturer’s Duties
ON THE EDGE: Selling Personalized Genetics
6.5 Advertising Ethics
ON THE EDGE: Advertising Death to Kids?
ON THE EDGE: New Balance and the “Made in USA” Label
6.6 Consumer Privacy
Becton Dickinson and Needle Sticks
Reducing Debts at Credit Solutions of America

PART FOUR Business and Its Internal Constituencies

Chapter 7 The Ethics of Job Discrimination
7.1 Job Discrimination: Its Nature
ON THE EDGE: Helping Patients at Plainfield Healthcare Center
7.2 Discrimination: Its Extent
7.4 Affirmative Action
ON THE EDGE: Driving for Old Dominion
ON THE EDGE: Peter Oiler and Winn-Dixie Stores
Should Kroger pay now for what a Ralphs’ Employee did in the Past
Wal-Mart’s Women

Chapter 8 Ethics and the Employee
8.1 The Rational Organization
8.2 The Political Organization
8.3 The Caring Organization
ON THE EDGE: HP’s Secrets and Oracle’s New Hire
ON THE EDGE: Insider Trading or: What Are Friends For?
ON THE EDGE: Delivering Pizza
ON THE EDGE: Sergeant Quon’s Text Messages
ON THE EDGE: Employment at Will at Howmet Corporation?
Death at Massey Energy Company
Who Should Pay?
key words
Ethical Decision Making,
Ethical Theories,
Conflict of Interest,
Discrimination, Affirmative Action,
Employment Rights,
Health and Safety,
Ethics in Finance,
Corporate Social Responsibility,
Governance, Accountability, Compliance,
International Business Ethics,

MBA Simulation Games 2017 - Excel file for Sales Forecast








Free Personal Support for





MBA Simulation Games 2018 - Ebook - All Winning Guides and Tips





Update 2018

New Stratetgies

Download here - LINK

And Free Personal Support

for Round 1 and Round 2