Law Case

Sally Sleez, an entrepreneur, has come to us for legal advice on multiple issues. First, Tim Timid has brought legal action against her, claiming a right to either have his jewelry returned to him or an additional $100 paid to him. Willie's Wholesale Ltd. has also brought legal action against her, claiming a right to the $500 under the "oranges contract." Finally, Ron Rowdy has brought legal action against Sleez, claiming a right to $1,500 for the Bose system that had been stolen by the individual who sold it to Sally. In addition to these issues, Sleez needs to know how the $1,000,000 liability to Jayne Lowe will be distributed among the affected parties.

Before we look at Sally's defenses, we need to know how the law will handle the I.O.U. in this case. The I.O.U. was made between Ron Rowdy and Mike Meek. It was for a $100 bet on who would win the Super Bowl. The men made the bet while intoxicated, and the following day, when Rowdy's team won the Super Bowl, he demanded $1,000 from Meek.

This contract formed between Rowdy and Meek is unenforceable. This is because there is no consideration between the two men. Rowdy receives the $1,000 I.O.U., but Meek receives nothing. When there is no consideration given, then the contract becomes unenforceable. This means that the I.O.U. becomes worthless.

Second, according to the Bills of Exchange Act, "A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay, on demand or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person or to bearer." (Bill of Exchange Act, 1985) The I.O.U. was a piece of paper that had "I.O.U. $1,000" written on it, and was signed by Meek. Therefore it is not a bill of exchange because it is missing vital information. Also, "An I.O.U. is not a promissory note, as it is not negotiable." (Duhaime) An I.O.U. is just a written acknowledgement of a debt. Therefore it cannot be used as a bill of exchange.

The first legal issue the Sleez is facing is from Tim Timid. Sally received the $1,000 I.O.U. from Rowdy, and later that day she traded the I.O.U. to Timid in exchange for $800 worth of jewelry. When Timid discovered that Meek, who had originally signed the I.O.U., wouldn't honour the agreement, he went back to Sleez. He demanded she return the jewelry, and even threatened her. Sally finally agreed to give Timid $700 in exchange for the I.O.U. He agreed and left. Now he is taking legal action against Sleez to either have the jewelry returned to him or an additional $100 paid to him.

Upon analysis of five categories of contractual situation, the actual contract that was formed between Meek and Sleez to exchange the I.O.U. for $700 is voidable. This contract is voidable due to duress. Duress states that the use of physical harm or the threat of physical harm renders a contract voidable. During the encounter between Timid and Sleez, Timid mentioned how Sally's windows were made of glass, and he mentioned how teenagers had been known to throw rocks at such windows. This would be physical harm to Sally's company. After this threat, Sally had a change of heart, and offered Tim $700 out of fear. In court, Sally would be able to have this contract set aside, and each party would return to the position they were in before the contract. This means that Timid would have the I.O.U. and Sleez would have the $700 she paid him.

In the case that Sally seeks to have the contract set aside due to duress, Timid may be able to seek legal action against Sally in respect to the original contract made. He may be able to take legal action due to the fact that the I.O.U. is not a bill of exchange, as proven above. This means that Sally cannot use the I.O.U. in exchange for other goods. "It is the duty of the seller to deliver the goods and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale." (Sales of Goods Act, 1989) Timid sold Sally the Jewelry, and it was Sally's duty to pay for the goods. Since the I.O.U. is not a bill of exchange, Sally did not actually pay for the goods, and therefore she breached the contract. Timid will be able to take action against Sally on this matter, and she will owe him the $800 for the Jewelry, or she will have to give him the Jewelry back.

Willie's Wholesale Ltd. is taking legal action against Sally Sleez for breach of contract. A contract was made between the two with regards to the sale of oranges. All four elements were present when the contract was formed:

1. The plaintiff, Willie's Wholesale Ltd. made an offer through an agent, Gary Gumshow, to the defendant, Sally Sleez, "How about some fresh oranges? We have a truckload on the way on from St. John, straight from Florida. We can deliver them tomorrow. How many should I put you down for? Five dollars a dozen."

2. The acceptance took place when Sally verbally accepted the offer of a hundred dozen fresh oranges. The plaintiff wrote up the order, and Sally signed it

3. Consideration exists in both parties: Sally is willing purchase the oranges to sell in her corner grocery store and Willie's Wholesale Ltd. is willing to make profit though selling the oranges to Sally

4. Finally both parties had the intention to follow through with the contract

When the hundred dozen oranges were delivered to the defendant's corner grocery store, most of them were spoiled due to the extremely cold weather while being hauled from St. John to Halifax. Sleez refused to accept them, and sent the truck away. The plaintiff is claiming a right to collect $500 for this contract on the basis of breach of contract. They believe the defendant breached the contract when refusing to pay for the oranges provided.

The agent of Willie's Wholesale Ltd., Gary Gumshow, offered Sally the oranges. He described them as being "fresh", and it is reasonable to believe that, as a salesperson for Willie's Wholesale Ltd., he would know the quality of the oranges. The Sales of Goods Act, section 17(b), states that "where goods are bought by description from a seller who deals in goods of that description, whether he be the manufacturer or not, there is an implied condition that the goods shall be of merchantable quality, provided that, if the buyer has examined the goods, there shall be no implied condition as regards defects which such examination ought to have revealed"(Sale of Goods Act, 1989). This means that Willie's Wholesale Ltd. has the obligation to deliver the oranges in the state that was described by the seller. When

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