Consider the following:

Jenny Joyful and Jill Joyful (sisters) have been long term employees of Renh Corp. (a company earning $277,300 per year and is the only company providing food to a chain of guesthouses.Both Joyfuls earn $68,200 per year.The contract between Renh Corp. and the guesthouses was established in 2002.It is currently being renewed every five years on September 30 taking effect January 1 of the following year.Renh Corp. and the guesthouses agreed to have three deliveries per day.

The Joyfuls are aware that net profit from Renh Corp. catering operation average $277,300 per year and that late arrivals have caused tension between the guest houses and Renh Corp. - a scenario which is contrary to the agreements between the parties. The Joyfuls have also started their own food company (Joyfuls Corp.) and are open to servicing the guest houses.Since starting the company, the Joyfuls have been absent from Renh Corp. on a number of occasions with pay, and that has contributed to the deteriorated service of Renh Corp. to the guesthouses.

In addition, fifteen guests at the guesthouses suffered food poisoning after consuming the food (no fault of their own) on June 9, 2021 and approached the guesthouses, who then informed Renh Corp.The tainted food can be traced to the work of Jill Joyful.The Joyfuls have conceded that Renh Corp. had a recent City inspection on April 2, 2021 and was given 60 days to improve sanitary conditions at their kitchen or face closure. Renh Corp. complied with the City's request.Nevertheless, the unsanitary conditions had the potential of causing food poisoning if employees did not exercise a certain level of care, but Renh Corp. employees are expected to exercise such care when preparing food.The Joyfuls are senior employees at Renh Corp. and Jill contends her work met expectations since the manager did not inspect nor disapprove of it.

On June 13, 2021, as a result of the aforementioned occurrences, Renh Corp. received word that the guest houses would be terminating the agreement (set to expire on Dec 31, 2021) on July 30, 2021.

Given their intimate knowledge of the situation, the Joyful sisters were able to secure the contract with the guest houses at a price of $55,000 per year for the same services Renh Corp. had offered for $ 65,000 per year, and the Joyfuls will earn a total $188,000 per year from their operation.

Renh Corp. will lose $49,000 per year as a result of losing the guesthouses' contract.

The guest suffered losses totaling $1113.13 each and the guesthouses have lost $2950 due to food poisoning, but have not lost any profit because of late arrivals.

Response Criteria (items that must be included in your response):

Assuming all figures are net of taxes and given your knowledge of Law and Economics including the law of Tort:

Identify the legal issues of a civil nature affecting each party.

Given the legal issues you identified, advise each party how they should proceed legally and explain the results you expect. Please consider the claims each party can make and the positions they can take as well as the opposing argument.

Include possible action by Renh Corp. against the Joyfuls other than termination of employment.

Are your results equitable and efficient? Explain. Include a discussion of punitive damages and the effect they would have on efficiency.

Be sure to state any reasonable assumptions you make or any contingencies you included.

Discuss the possibility of a simple bargain and compare it to a Coasean solution between the parties.