Before Ms. Henry replies to Mr. James, write an objective report to her (refer to the report

guidelines on the Gateway web site), addressing the following questions. (Assume that the

applicable precedent is from the fictional jurisdiction of the state of Gould).

Q. 1.

Is the disclaimer of any consequential damages contained in the Purchase Order

Acknowledgment part of the agreement between Best Burger and Noble Fir?

Q. 2.

Using MS Excel and the data given in the case:

a.

Create a histogram of the weekly operating profits from the prior year of

operation, using 6 equal sized bins. What is the mode on the histogram?

How would you define it? Which probability distribution does the histogram

resemble? (You may wish to use the Excel file Noble Firs

Case.xls

at the

Gateway web site.)

b.

What was the average weekly profit for the prior 12-month period?

Determine and define the variance and standard deviation of weekly profit.

c.

How confident are you of this estimate? Calculate a 99% confidence

interval for weekly profits, assuming that sigma is unknown. What does this

tell you about weekly profits?

d.

Based on the above, what is the expected exposure on the lost profits

claim?

Q. 3.

Assuming that the consequential damages clause is deemed not part of the contract and

further assuming that the delivery crew was negligent in decorating the tree, could Noble

Fir be held liable for the lost profits? In answering this question, make sure to address

the legal standard for awarding lost profits and the results from Q. 2. (Assume that

expenses and revenues are similar from year to year.)

Q. 4.

Assume that, based on Q. 2. d. above, Noble Firs made an initial settlement offer to

Burger. However, on behalf of Best Burger, Mr. James declined the offer because he felt

the offer underestimated the lost profits. He stated that profits from the last six months

(26 weeks) before the fire are more indicative of future expected profits. He feels that

only data from the last six months should be used to calculate future expected profits.

a. To formally test Mr. Jamess claim, test to see if there was a significant

difference in mean weekly profits between the first 6 months of the year and

the last 6 months. Use a 0.05 significance level and assume equal

variances. Does this support Mr. Jamess claim?

b. Having thought about Mr. Jamess suggestion, you consider several options

as an estimate of lost profits. These include 1) the full year, 2) the last six

months only, 3) a weighted average that gives twice the weight to the last

six months as to the first six months, or 4) some other weighted average.

LOOKING FOR Q4 part a and b