Keller graduate School of Management

MGMT597: Business Law

Week 1: Assignment

Case 9.4, p. 165

Issue
The issue here is whether or not Dr. Vranich should pay Winkel the profit-sharing
bonus promised given that she made an oral modification of the initial written contract.
Rule
Section 1698 of the Civil Code provides: A contract in writing may be modified by an
oral agreement to the extent that the oral agreement is executed by the parties.
Analysis and Conclusion
According to Section 1698 of the Civil Code, for Winkel to recover the profit-sharing
bonus orally promised, there should prove that the oral contract has been executed, which
means fully performed by the parties. However, Dr. Vranich never paid this bonus even for a
month; so the oral agreement was not performed and the contract never executed. As a result,
Winkel is not entitled to receive the profit-sharing bonus.
Even if Dr. Vranich wins the case by not paying the profit-sharing bonus she promised,
she did not act ethically in raising the defense that the contract was not in writing. This prove
that she did it on purpose. She knew that when modifying only orally the contract she made
with Winkel and never paying the bonuses even for a month, she could claim that the contract

was not fully executed. Indeed, the defense to the enforcement of a contract stipulates that
failure to a contract to be in writing or to be in proper form may be raised against the
enforcement of the contract. (Henry Cheeseman. Business law)
Reference
Cheeseman, Henry. Business law. Seventh Edition. P.154
Onecle. Modification and Cancellation - California Civil Code Section 1698.
February 16, 2015. Retrieved from http://law.onecle.com/california/civil/1698.html

Case 10.7, p. 178

Issue
The issue here is whether or not Peter Andrus should pay the premiums given that he
remained silent to Duricks offer considering the fact that this offer notifies silence as
acceptance.
Rule
A counteroffer by the offeree simultaneously terminates the offerors offer and creates
a new one. (Cheeseman. Business Law. P 173)
Analysis and Conclusion
The first offer of $48,000 made by Durick was rejected and terminated by the
counteroffer made by Andrus. He made himself clear on the conditions: 1) he wanted
insurance to match the amount of the outstanding mortgage on the building (i.e., $24,000) and
(2) if Durick could not sell this insurance at this price, he would go elsewhere. This become

the new offer and the previous one is void. However, since Durick sent back a new policy
with the same initial amount Andrus rejected but with a clause of silence by acceptance, the
silence of the latter could not be considered. This is because the new policy sent by Durick
did not included Andrus revisions. So it was just a counteroffer that was never approved by
the defendant and he was not obliged to respond. So I will rule in favor of the defendant. No
premiums should be paid.
Reference
Cheeseman, Henry. Business law. Seventh Edition. P.173

Case 11.4, p.189

Issue
The issue here is whether or not Robert Chuckrow should pay the additional cost of reerecting the fallen trusses given that these trusses felt after the contract price was already
established.
Rule
A promise lacks consideration is a person promises to perform a preexisting duty. A
preexisting duty is something a person is already under an obligation to do. (Cheeseman.
Business Law. P 185)
Analysis and Conclusion
Mr. Ralph was hired with the conditions that he will provide all labors, equipment and
materials needed for the carpentry work. On the contract, Chuckrow have not specify the
number of trusses that would need to be repaired, they just agree on a price to have the whole

carpentry work done. Since the fallen of the 32 additional trusses was not due to Chuckrows
fault or any deficiency in the building structure, we can assume that Gough during its
evaluation of the work to do, have make some error in the estimation of the damage.
Moreover, Gough was already under a preexisting duty to perform the carpentry of the store,
so there is no consideration because he was already under the obligation to make the repairs
of the store. At a result, Mr. Gough ill not recover the additional expenses of the fallen trusses.
Reference
Cheeseman, Henry. Business law. Seventh Edition. P.185

Case 13.1, p. 215

Issue
The issue here is whether or not the sale contract made between the estate and Drs.
Steele and Faust can be rescind given that the estate made an error on the real measurement
and value of the house.
Rule
In most cases of unilateral mistake, the mistaken party will not be permitted to rescind
the contract unless (1) One party makes a unilateral mistake of fact, and the other party knew
(or should have known) that a mistake was made. (2)A unilateral mistake occurs because of a
clerical or mathematical error that is not the result of gross negligence. (3)The mistake is so
serious that enforcing the contract would be unconscionable. (Cheeseman. Business Law. P
208)
Analysis and Conclusion

In this case, the estate discover after have signed an agreement with Steele that a
mistake was made on the real dimension and so value of the house sold. If the two parties
have made the measurement together and the mistake was mutual, they could have agree to
rescind and write a new contract. But in this case, the mistake is unilateral. The estate made a
mistake in the measurement of the house and the other party Steele did not knew about it
when purchasing the house. Also, the mistake was not due to a mathematical error but a
negligence of the estate and finally this mistake will not result to unconsciously act or
consequence. So since none of the three situations needed to not enforce this contract is met,
this contract could not be rescinded. Drs. Steele and Faust will keep the property with no
additional cost and the estate will have to transfer the deed.
Reference
Cheeseman, Henry. Business law. Seventh Edition. P.208