Charley Hoarse and Ponie Upp are Commerce alumni who have enjoyed successful careers in the banking industry. Passionate horse lovers, they decide to retire early and realize their dream of owning and running a horse ranch. Together they purchase a beautiful 25-acre horse riding facility in King City north of Toronto, which includes indoor and outdoor riding arenas and a large 30-stall horse barn, as well as a lovely Victorian brick home where they will live. Soon after completing the purchase of "Gallstone Ranch" (as they call it), Charley and Ponie rent out 20 of the stalls to people who want to board (lodge) their horses at Gallstone Ranch. The cost (which includes hay for the horses) is $800 per month, or boarders can pre-pay for 12 months at the discounted price of $8,800. To ensure that the horses have lots of hay to eat, Charley contacts Otis Hays, President of Fine Equine Dine Inc. (FED) about purchasing hay for a year for twenty horses. Otis emails Charley, saying "We estimate that you would need about 4.5 tons per horse, so we can supply you with hay at $250/ton if you order 90 tons." Charley replies back, saying "We would be willing to proceed if the price is $175/ton." Otis emails back, saying, "$225/ton is the lowest we can go." At this point, Charley decides to shop around. He finds the website for Stray Hay At Bargain Basement Yields Ltd. (SHABBY). On the website, SHABBY is offering hay at a great price - $125/ton - so Charley orders 90 tons of hay from them. No details are included on the website about the type or quality of hay. Next Charley and Ponie go online to see about purchasing several horses for riding lessons offered by Gallstone Ranch. They come across the website for Flimflam & Scamm Ltd.- Horse Dealers (Flimflam). They recognize Flimflam owner Sam Scamm because Charley and Ponie's son Mustang is enjoying a very successful career working for Sam's wife Pam at The Bridle Path, a world renowned supplier of luxury riding saddles. So they decide to go look at the horses Flimflam has for sale. At the Flimflam farm, Sam boasts about how Flimflam only sells quality horses that are in the best of health. Charley and Ponie really like three of the Flimflam horses, but when Sam tells them the three horses will cost $40,000, they hesitate. This irritates Sam, who says "we think our prices are very fair, so you shouldn't wait because these horses will sell fast. And by the way, the future of Mustang's career at The Bridle Path will depend on your decision". Worried about Mustang, Charley and Ponie reluctantly agree to make the purchase.

A short time later, Charley and Ponie complete the last part of their plan for Gallstone Ranch by hiring retired rodeo rider Dino Palamino to teach riding lessons at Gallstone Ranch. Now that everything seems to be in place, Charley and Ponie celebrate by going to see the famous Buckin' Bronco Rodeo at Exposition Place in Toronto. After the Rodeo ends, they go out to their car (which is parked in the Exposition Place parking lot), only to discover that even though there are security cameras all over the parking lot, the driver's window has been smashed, and Ponie's very expensive luxury brand name purse has been stolen. When they go to the Exposition Place security desk to report the break-in and theft, they are told that several staff had called in sick that evening so no one was watching the security cameras, but "there is nothing that can be done for you anyway since you agreed to accept all risk of loss". When Charley and Ponie dispute this, they are told to look on the back of their Rodeo tickets, where the following is printed in small print: Ticket holder agrees to assume all risks while on Exposition Place premises. Feeling very upset, Charley and Ponie head back to Gallstone Ranch, where they discover that the hay that was delivered by SHABBY is full of slimy black mould. The next morning, Charley calls SHABBY to complain. The SHABBY sales person apologizes and says SHABBY had no idea the hay was so mouldy, but refuses to do anything about it because "at that price what did you expect?!" Charley isn't quite sure what to do at this point, so he goes online to find another hay supplier. It turns out that due to increased demand in the market, hay is now generally selling for over $300/ton, so Charley emails Otis Hays at FED the following: , "we will take 90 tons of hay at $225/ton - just like you offered". However, Otis replies to Charley, saying "unfortunately, when we didn't hear from you we went ahead and sold all our remaining hay to someone else". Things get even worse later that day when there is an accident in the outdoor riding arena. Sixteen year old Holly Colt is there riding her pony Baloney, who she boards at Gallstone Ranch (having pre-paid for 12 months at the discounted price of $8,800). Baloney steps on a rusty nail sticking up from a broken piece of the fence lying on the ground, causing the horse to buck suddenly. This throws Holly onto the ground, where she hits her head. Not wearing a riding helmet, she suffers a concussion. Two days later, Holly removes Baloney from Gallstone Ranch and demands a full refund of the board she has paid. Charley and Ponie feel badly about what happened, but don't think they should have to give any refund. Meanwhile a number of the horses start to get very sick and need emergency veterinary care. It seems that Charm Farm, located a kilometer down the road from Gallstone Ranch, had been spraying pesticides on its crops, and some of the pesticides are leaking into Gallstone Ranch's water supply. When an angry Charley pays a visit to Charm Farm to complain, they dismiss his concerns, saying "we've been crop farming this way for years, and we aren't about to stop now". Then tragically one of the horses that was purchased from Flimflam collapses suddenly. Ponie calls a local veterinarian, but despite his best efforts the horse dies a short time later. The vet says that the horse had a huge cancerous tumor that had been growing for many months and should have been fairly obvious to anyone who knew what to look for. The vet also checks out the other two horses purchased from Flimflam, and discovers that they, too, have serious health problems. Given this, Charley and Ponie now believe that they overpaid for those horses, but aren't sure what they can do about that.

While this is happening, Dino is giving a riding lesson to Claire Mare, a beginner rider. Dino is trying to teach Claire how to ride "sitting trot", which involves sitting in the saddle while the horse is trotting. Claire is bouncing all over the saddle, so Dino tells Claire to let go of the reins, take her feet out of the stirrups, close her eyes and try to relax while the horse is trotting. (This is a teaching technique that is often used to help novice riders learn how to ride "sitting trot".) Claire tells Dino she is scared to do so, but Dino insists she will be fine. So Claire does what Dino says. Unfortunately, shortly after doing so, she loses her balance and falls off the horse. She lands hard on her shoulder, which was almost healed from having been dislocated a few months earlier. Because of the previous shoulder injury, the fall causes serious permanent damage to her shoulder. At this point, Dino informs Charley and Ponie that he is quitting. A short time later, they learn that he has gone to work for another ranch about ten kilometers away, where he has been saying very critical and insulting things about Gallstone Ranch. Many of the students he was teaching at Gallstone Ranch have left Gallstone Ranch to take riding lessons from him at the other ranch after hearing the things he has been saying. For Charley and Ponie, this is the final straw (so to speak), so they decide to seek legal advice about all that has been happening. They go to the well-respected law firm Bigger & Better LLP, where they meet with senior partner Carter Smarter. You, Bea Calm, are a junior associate in the firm, and Carter has asked you to join him in this meeting. During the meeting, Charley and Ponie relay all that has been described above, and ask for help in understanding their legal rights and obligations. After the meeting, Carter asks you to prepare a memorandum, using whatever format you choose (subject to the instructions set out at the beginning of this Assignment), in which you identify all of the legal issues arising from these facts. Carter asks you to analyze each such issue by outlining the relevant legal rules and principles and applying them to the facts. He also asks you to briefly conclude each such analysis by indicating how you believe a court would resolve that issue. REQUIRED: Assume the role of Bea Calm and prepare the memorandum requested by Carter.