Dr.

Jennifer Smith’s Accounting 568-01W “Business Law for Accountants”

Week 5 Homework

Case Brief: Margeson v. Artis

Facts:
John and Jennifer Margeson entered into an agreement with Theresa Artis and MASYD
Enterprises, L.L.C., to sell the Margesons’ business A Perfect Fit, L.L.C., for $125,000, On
October 1, 2004. Payable upon contract’s closing. As an addendum to the agreement on October
7, 2004, John Margeson and Theresa Artis changed the total sales price to increase to $155,000;
comprised of a $125,000 secured loan, $10,000 cash, and $20,000 to be paid monthly based on
sales. Although Artis signed the addendum, no payments were ever made. The Margesons filed a
breach of contract action.

Procedural History:
The district court granted and ruled the Margesons' motion for summary judgment, the court’s
judgment against Artis and MASYD was for $20,180, plus interest. Artis and MASYD appealed
the court’s decision, citing the addendum of the contractual agreement should be voided due to
lack of consideration. Artis and MASYD also was alleged the addendum’s agreements created a
dispute of material facts. The Court of Appeals of Iowa found no errors in the District Court’s
summary judgment and reaffirmed the ruling. The Supreme Court of Iowa would next hear the
case.

Issue:
Artis argues the terms of the addendum are not a legally binding part of the contract. Artis
argued the Margesons were legally obligated to sell the business to her for $125,000 (under the
first agreement). Artis also argued that no independent consideration was given to the addendum.

Decisions (Holding):
The Supreme Court of Iowa vacated the district court’s decision. The Supreme Court of Iowa
also reversed the Court of Appeals of Iowa decision and remanded the case.

Reasons:
The Supreme Court of Iowa concluded that the addendum was not supported by independent
consideration and The Margesons were not entitled to summary judgment on their claim for
breach of contract. The Supreme Court of Iowa ruled that summary judgment should only be
used when an ambiguous contract presents a legal question. The Supreme Court of Iowa
discovered that the original agreement did not allow the Margesons to change the amount of the
purchase price (only the timing of the payment). Additionally, The Supreme Court of Iowa
interpreted that clauses in the original agreement did not support a waiver of the requirement of
consideration if there was a modification of the purchase price.

Case Brief: Rogers v. Household Life Insurance Co.

Facts:
Jason Rogers father, Alan Rogers, was diagnosed with Alzheimer's and dementia in 2003. In
may of 2007 Jason assisted his father in completing an online application for life insurance
offered by Household Life Insurance Co. (HLIC). Alan Rogers' life insurance policy was
approved several days later and had a face value of $250,000. Jason was listed as the sole
beneficiary of the policy. Absent on the application that Alan had been diagnosed with
Alzheimer's and dementia. Alan died on June 7th 2007, the cause of his death listed by the corner
was “dementia of the Alzheimer's type.” HLIC denied Jason’s claim for the $250,000, citing the
policy was void from its inception, and that Alan had been adjudicated mentally incompetent
before the May 2007 was application submitted. Jason sued HLIC, alleging breach of contract
and tortious bad faith. HLIC moved for summary judgment based on the argument Alan was
adjudicated mentally incompetent.

Procedural History:
The district court granted summary judgment in favor of HLIC. The court ruled that Alan's
adjudication of incompetence rendered the contract void. Jason appealed.

Issue:
There are two issues: under Idaho law, is a life insurance policy contract void when the person
entering the contract was adjudicated to be incapacitated at the contract’s inception? Or does the
law merely suggest the allowance of a contract being voidable, when the person entering the
contract was adjudicated to be incapacitated at the contract’s inception? The second issue in this
case if Jason’s guardianship of Alan be a determinate of incapacity?

Decisions (Holding):
The Supreme Court of Idaho affirmed the district court’s summary judgment in favor of HLIC.

Reasons:
The Supreme Court of Idaho conclude that since a person is deemed incapacitated by a judge’s
ruling, that person is not able to make decisions to his or her basic needs. Therefore, the contract
was void at inception. As for the second issue, The Supreme Court of Idaho determined that the
ruling magistrate appointed Jason as guardian with unrestricted authority, this implied that the
guardian’s ward (Alan) was not capable of any degree of independence and/or self-reliance. This
ruling reinforces and further defines a person’s capacity to enter into a contract.

Case Brief: Harrison v. Family Home Builders

Facts:
Gary Harrison and Patsy Harrison entered into a written contract on January 5, 2007, Family
Home Builders (FHB). FHB agreed to perform remodeling and construction work on the
Harrisons’ house in Lauderdale County. FHB began the work but on May 4, 2007, the Harrisons
terminated the contract before FHB was completed. On July 16, 2007, the Harrisons sued FHB.
Their suite alleged breach of contract, negligence, and fraud.

Procedural History:
Summary judgment was made in favor of Family Home Builders and The Harrison’s appealed.

Issue:
Did FHB successfully defend itself against claims of breach of contract, negligence, and fraud?
Did the lower court err in summary judgment?

Decisions (Holding):
The Court of Civil Appeals of Alabama affirmed part of the case, reversed and remanded parts of
the case.

Reasons:
The Court of Civil Appeals of Alabama reversed the summary judgment of the breach of
contract claim. The court reasoned that FHB did not render services substantial enough to fulfill
performance of the contract. Because FHB did not provide a time of completion for the work,
they only contracted for a ‘reasonable time’ to finish the contracted work. The appeals court also
reversed the summary judgment for negligence (which originally was in favor of FHB). The
court ruled that FHB failed to perform the work failed in accordance with the given plans and
specifications; and that FHB also failed to supervise the performance of the work in a proper
manner. The preceding two claims were remanded. On the claim of fraud, the appeals court
affirmed summary judgment, the civil appeals court found no elements misrepresentation by
FHB.