Background: Dan works for PumpIt an oil and gas company that is primarily concerned with building pipelines, in sales. One day, he secures a major contract with TransOil, a company that owns pipelines, worth $160 Million to upgrade a pipeline from a processing facility in Northern Alberta to a refinery in Saskatchewan. 1) Dan emails his boss, Lara, to tell her the good news. She comes by his office later that day and promises him a $15,000 bonus for, "doing such a good job." Question: Is Lara legally bound by her promise to give Dan the bonus? Explain why or why not with reference to the principles of contract law. (3 marks) 2) Later that day, Dan gets a phone call from his wife, Wanda. Explains that their fourteen year old daughter, Jenny, had bought herself a new computer for $2,000. Jenny is now experiencing a major case of "buyer's remorse" after having made such a huge purchase. Wanda explains that there was a "no returns" policy on the receipt and the store is refusing to let Jenny return the computer and get her money back. Question: Is Jenny bound by the contract with the store? Explain why or why not with reference to the principles of contract law. ( 3 marks) 3) A few months later, things are not going well for PumpIt. The upgrade contract Dan landed has a major problem. When Dan had negotiated the contract, the representative from TransOil had said that the land the pipeline had been built on was all flat, high ground away from any water sources. However, when PumpIt crews began working on the project, they found that large parts of the pipeline were, in fact, running through bogs and marshes. This terrain is much more difficult to work in, as equipment and trucks often get stuck in the mud. As a result, it's taking PumpIt crews much longer to perform their work than had the pipeline been on the flat, high ground that TransOil had claimed. In fact, PumpIt now stands to incur a loss due to all the added expense of having to take more time and work in much more difficult conditions. Unknown to Dan, the TransOil representative wasn't paying attention to the design document and that's why he didn't tell Dan that the pipeline ran through bogs. Question: Is PumpIt bound by the contract with TransOil? Explain why or why not with reference to the principles of contract law. (6 marks) 4) To make matters worse, Lara has still not paid Dan the $15,000 bonus she promised him and now says she's not going to give it to him due to all the trouble the TransOil contract has caused. She's so angry at him that she threatens to fire him if he does not sign a contract whereby Dan agrees to hand over all the patent rights to an invention he had developed and patented before ever working PumpIt. Dan agrees. Question: Is Dan bound by his promise to hand over the patent rights? Explain why or why not with reference to the principles of contract law. (4 marks) 5) That evening, Dan goes out for a few drinks at a pub to try and relax. He ends up drinking heavily that night and stumbles home, reeking of alcohol. When he wakes up the next day, he finds papers stuffed into his jacket pocket. When he read them, he's horrified to find that, while stumbling home drunk the previous night, he had gone into a car dealership and purchased a brand new top-of-the-line BMW with a very expensive custom paint job. Question: Is Dan bound by this contract for the BMW? Explain why or why not with reference to the principles of contract law.(4 marks) Instructions: Identify and assess whether the promises and contracts in the above scenario are binding and any relevant remedies. Explain why each promise or contract is or is not binding with reference to the legal principles of contract law. Sample Question and Answer: If a contract was entered into with an illiterate person (4 marks), your answer would be: The contract is not binding (1 mark) because of unconscionably (1 mark) since Party X was illiterate ( 1 mark) and therefore particularly vulnerable to exploitation (1 mark)
