Background:Things are moving quickly for the GC owners.They are almost ready to open operations and finalize contract negotiations with EPI to purchase cleaning products.EPI and GC have already agreed that GC:

(1) willbuy cleaning products exclusively from EPI for three years,

(2) will be permitted to resell those products to clients and other businesses, and

(3) may contract with certain businesses who buy cleaning products from GC to become Authorized Distributors (AD) for those GC products; ADs will be listed on GC's website.

GC needs to draft a contract to reflect an agreement between GC and future ADs.The contract will be complex, and GC is concerned about risks and liabilities created by AD relationships.

In a meeting with TLG, GC owners stated they have heard about several recent lawsuits involving businesses and ADs.Connor presented a "what if..." scenario that could create complicated liabilities arising from GC-AD agreements.

The "what if..." scenario follows.

"What-If..." scenario:In contracts with ADs, GC includes anindemnification clausestating that the AD would cover claims by third parties harmed directly as a result of the ADs actions.

A GC AD contracts to clean concrete floors in a commercial building in North Carolina using Floor-ex, a cleaning solution, purchased from GC (manufactured by EPI and sold to GC for resale distribution).

The AD's employee spills a large tub of Floor-ex on the job site resulting in the following:

• the building owner slips on the spill, is injured and misses 3 weeks of work;
• the building owner hits a piece of equipment in the fall causing it to slide resulting in damage;
• Floor-ex splashes on the wall, staining it and part of the wall must be replaced.

The building owner files a lawsuit against the AD and GC for negligence, as well as for product liability.The building owner seeks compensation damages for:

• medical expenses and economic loss from her injuries;
• costs for repair to the building wall;
• costs for repair to the damaged piece of equipment.

The GC owners ask TLG's opinion about their liability if a situation like the "what-If..." scenario occurred with one of their ADs.TLG's response will influence the owners' final decision about whether to use ADs in their new business.

Instructions:

Winnie and Ralph asked you to discuss the"what-If..." scenarios and analyze the related potential liabilities with an attorney TLG has on retainer.Winnie and Ralph want you to then summarize the attorney's analysis in a memorandum to them for further discussion with the GC owners.

The memo should analyze and explain:

Part I. Green Clean

1.The strengths of the plaintiff's negligence claim against GC;

2.Potential defenses, if any, GC could assert in the negligence claim;

3. The strengths of the plaintiff's product liability claim against GC;

4. Jurisdiction issues if GC was sued in North Carolina.

Part II. Authorized Distributor

5. The strengths of the plaintiff's negligence claim against AD;

6.Potential defenses, if any, AD could assert in the negligence claim;

7.The strengths of the plaintiff's product liability claim against AD;

8.Whether, if AD is found liable for negligence and for product liability, AD could sue GC to recover damages paid to the plaintiff?

Memorandum

To:Winnie James, Ralph Anders

From:(Your Name)

Date:

Re:Liability Analysis

Part I.

1.

2.

3.

4.

Part II.

5.

6.

7.

8.