(Cases are in Canvas)

FINANCIAL STATEMENTS CASES

Case 1

A company with 10,000 euros of losses from previous years has a positive result of 845 euros in
2022. Can they distribute a dividend?

No, the losses are too big

--- Case 2

(Legal reserve 20% of the capital)

Can you distribute a dividend? Yes:

30000(profit before taxes) – 20000(negative results) = 10000

10000 – 5000(legal reserve) = 5000

--- Case 3

(Net worth----> assets – short term liabilities)

Can you distribute a dividend? No, because the losses are bigger than the profits

No important (changed the information of the case to make it work) =

Profit: 3000 Losses: 4000

3000 – 4000 = -1000

Case 4

What advantages do I have if I own a preferred share

1. I can receive dividends before anyone else

2. If the company is liquidated, I can get assets before anyone else
3. I can get stock options before anyone else

Case 5

Do shares have a minimum selling price? And maximum?

● Minimum yes, the value of the shares when they are first issue (initially given to them)
● Maximum no
Case 6

What is the difference between authorized shares, issued shares and outstanding shares?

● Authorized shares are the sales authorized by the shareholders meeting, not given to
● shareholders.
● Issued shares are given to the shareholders and paid
● Outstanding shares are given to the shareholders and not paid

INTELLECTUAL PROPERTY CASES

Case 1

The company Producciones Cinematográficas Canguro intended to make an audiovisual work,

whose central theme would be the social situation of homeless people, in which the
environment of social marginality in which they live and the problems that this entails are
revealed. For this purpose, they begin conversations with Mr. Eugenio, director and
screenwriter, to conceive and complete this documentary. Without more than a verbal
agreement and using financial and material resources from the production company, Mr.
Eugenio developed the script and directed the audiovisual work, for which he invested six
months of work. In payment for the work done, he received X euros per month from the
production company.
After a few months, Mr. Eugenio learned that the production company had transferred the
exploitation rights of the documentary to an NGO and that, following their instructions, they
had reduced the length of the documentary by a quarter. He is aware that the transfer that was
made had a duration of twenty years, that the documentary will be shown in public theaters
and that it is shown without the name of the director being recorded.
Can the producer assign the rights to the NGO (ONG)?

No, the company is not the owner of the documentary, he did not sign a contract

Case 2

Indicate if the following is intellectual property:

Map: Copyright

An opinion issued by a Court: no protection

The official translation of a ruling from the ECI: no protection, is public.

A private translation of an ECJ ruling: Copyright

Case 3
X, author of a book, asks the publisher to withdraw the work from commerce due to a change in his
moral convictions. Is it possible? And if X asked the publisher to modify the work, would it be
possible?

● Yes, because it is his work

● Yes, but the editorial can sue you for damages for taking out the book of the stores, making
changes, etc.
Case 4

X is the grandson and only heir of a famous writer. His grandfather died in 2000. Will he always
own these rights, or is there some limit?

● 70 years since the death of his grandfather

Case 5

I am going to write an article and I want to include an excerpt from an article by Pérez Reverte.
Is it possible?

● Yes, you can use it on newspapers (cites), academic papers, criticism of a book, satire/irony.

Case 6

How can the exploitation rights of the work of a famous painter be transferred?

● If he is alive, he has to register the copyright of the paint and then sign a contract signing the
rights to exploit the painting but no ownership
● If he is dead, 70 years after his death (heirs have the rights)

Case 7

Do the performers of a work have copyright?

● The director of the orchestra doesn’t have the copyright of Bethoven work but yes of its
performance

Case 8

A company registers a trademark in La Coruña, to sell a product only in Galicia. Another company
registers the same trademark, with the same name but different design, in Huelva, to market it
in Andalusia.
Can the first company file an opposition to the registration of the trademark requested by the
second? Is there a chance of success in arguing that there is no identity between the brands? Is
there a chance of success in claiming that products are marketed in different geographical areas?

● The first company can sue the second company because they had registered the trademark
first
● Does not make any difference, is the same trademark
● This may success but the official patent of Spain doesn’t accept it, because locally would
work but once it enters the national market there would be confusions between the two
brands.

Case 9

A Draftsman's Studio has carried out the design of an ornamental water fountain, which has
been commissioned by a company that builds and carries out decoration work on buildings,
including the installation of water fountains. This design has a combination of colors, figures and
drawings, as well as various jets of water that rise under pressure. Apart from the central body
of the fountain and its outer perimeter, the design includes lights placed at various points of it.
Once the design is accepted by the client company, its creation will be entrusted to the sculptor
with whom they usually work. This type of fountain is a creative novelty compared to others on
the market.
a) Could it be protected as a patent, as a utility model, as an industrial design or as a trademark?

● Yes, industrial design (Draftsman’s Studio)

b) Could it be protected as intellectual property?

● Copyright because it is his creation (sculptor)

c) What is more favorable?

● The industrial design has more protection (strength) the copyright has more protection
(time)

Case 10

Mr. Luis is an employee of BIOTEC SA, his occupation being that of maintenance technician.
computer systems, dealing with computer repair and tuning tasks of the company and supervision of
orders for computer spare parts. Mr. Luis, who is taking doctoral courses in computer engineering, and
given that he has a certain amount of time during his work day at BIOTEC SA, he has been developing
on his own account a specific scanner that allows detecting the presence of biological material on the
paper surface or cardboard and the like. To develop this scanner, he has used his ingenuity personnel
and laboratory material and other scanners that he has been modifying from BIOTEC, as well as
documentary sources also from BIOTEC. The scanner has been very useful and
excellent performance and it is intended to be patented.
Do you have any rights to the invention? Can you patent without telling the company anything? That
What if I were an investigation technician hired by the company?

● The rights are own by the company, because he has used the resources in his working time
● Yes
● No, because the company hired you to invent something so the patent belongs to the
company

Case 11
Mr. Arturo Rosa devised a vegetable shredding machine whose registration he requested six years ago
before the OEPM. The OPEM responded favorably to his request, since, due to its technical
characteristics, the mechanism of that machine was quite complicated to reach for an average
engineer at that time. Once the application has been submitted, Mr. Arturo Rosa gave an interview to
a specialized magazine, in which he fully explained the operation of that machine.
What figure of industrial property does Mr. Arturo Rosa own? Can another person register the
machine on the basis that the contents of the patent have already been revealed in an interview?

● Patent (utility)
● He revealed the content but asked for the registration, so no.
● (other answer) Since he has revealed the content, but he asked for the registration, for the
time being, someone can register

COMPETITION LAW CASES

Is this conduct forbidden?

CASE 1mn

A and B are two companies dedicated to the manufacture of mid-high range smartphones. The
terminals of both companies are increasingly demanded by users. Both companies, aware of
this, reached an agreement to limit the production and sales to turn their smartphones into
almost inaccessible products, thus simulating demand and guaranteeing the level of prices. A and
B barely have an 8% share of the mobile phone market of the mid-high range smartphones.

● It is a forbidden conduct in general, but it depends on the % of the market and everyone
involved.
● Price fixation: to companies or more agree to set a price on the market.
● If the effect is minimum is not forbidden. In this case it is forbidden because we don’t have
the information about the rest of the sectors.
 ● It is forbidden because it is a price fixation.

CASE 2

H is a Spanish textile company that currently has a share of 5% of the Spanish fashion
manufacturing market. H wants to enhance its expansion throughout the national territory and,
for this, it is trying to reach an agreement with P, a well-known chain of clothing stores, to
distribute H’s products in its establishments together with the products of other well-known
clothing brands. P has 9% share of the fashion distribution market. In the distribution contract
that H wants to sign with P, it is expressly established that H will periodically communicate to P
the price at which it must sell H products to customers.

● Forbidden because a company can’t force another one to sell their products for the price
they say because they have their market. Restriction of free trade.
● Price fixation for the distributor but not the customers

CASE 3

A and G are two Spanish companies, interregional bus companies. A has a 4% share of the
national land passenger transportation market. For its part, G barely reaches a 5% share in the
market. The competitive pressure in the land passenger transport sector is growing every day
because of the entry into the market of new operators. On the other hand, both companies offer
their customers largely the same routes. Many of these routes are barely profitable or, directly,
deficient. Faced with this situation, the managers of A and G meet and, to increase the occupancy
of buses and the profitability of the various lines, they agree on an equitable distribution
between both companies on the least profitable routes, so that some of those routes will only
be offered by A and others exclusively by G.

● Forbidden because market allocation is distribution of the market between competitors.

We are restricting other companies the use of those routes.
● If there are more companies that do those routes it's okay, if it's only them is forbidden.

CASE 4

A, B and C are three of the main tobacco producing companies in rolling tobacco (between the
three they have 9.8% of the national rolling tobacco market). The three are characterized by their
commitment to producing natural tobacco that is the least harmful to the customer. They invest
huge resources in research and development. A while ago the government decided to raise taxes
on certain products among which tobacco, sugary drinks and sour drinks stand out. The increase
announced for rolling tobacco is 6.8%. In view of this government decision, they agreed to
increase the price of rolling tobacco no more than 5%. The rest of the tax increase will be assumed
by the companies themselves even though the margins with which companies that produce
roll-your-own tobacco are increasingly reduced due to the strong competition in the sector. The
announced tax increase came into effect last December 1. On December 2 A raised the price of its
rolling tobacco by 4.8%. On December 8, B increased the price of its rolling tobacco by 4.5% and
on 19 December C increased its rolling tobacco price by 5%.

● It’s not forbidden. They are rising their prices in proportion that corresponds to the rise of
tax percentage. There is price fixation between companies.

CASE 5

The Official College of Pharmacists of Spain sends the following circular to its members:
NESTLE BABY FOOD AND JARS IN SHOPPING CENTERS
Following its calculated and programmed commercial policy, the multinational Nestlé has taken
another step, as was predictable, and Nestlé baby food and jars are now sold in shopping centers
throughout Spain with the NIDO brand, in direct competition with those we have in our offices
of pharmacy. This multinational has made this decision without prior consultation with the
pharmacists who, for several decades, have dispensed and advised milk, baby food and jars.
Current economic trends ignore our status as health workers and infant feeding technicians.
Pharmacists have the legitimate capacity to support from now on the manufacturers who
continue to trust the pharmacy as the only sales channel without this meaning deviating from
our priority objective: good health and adequate infant nutrition.
At the moment the options available are the following:
• Explicitly recommend any of the other brands that meet the double condition of quality and
exclusivity in pharmacy offices.
• Relegate Nestlé products to the supermarket and sell them only when they are specifically
requested.
• Do not sell them from now on and return those we have in stock.
Do not forget that the freedom that these companies claim is the same that we have and that
future damage to our profession will depend on our response.
Determine if this behavior fits within any anticompetitive behavior.

● Boycott because if the pharmacies comply with the recommendation of the college of
pharmacist, they are restricting the distribution of nestle by this agreement. Boycott
since most of the pharmacies go against Nestle.

COMPANIES CASES

Case 1
Maria and Jose are married. When married, they did not go to the Notary Public in order to sign a
marriage settlement.

Jose is a sole entrepreneur and had a small retail shop: he suffered a robbery in the shop and due to the
attack, one of his workers was seriously injured.

Jose was sued because of this and he was condemned to pay 500.000 € for damages. He has not an
insurance covering his civil liability.

Jose has an apartment inherited before getting married and he has rented it receiving 600 € monthly.
Jose and Maria live in another flat they bought right after the wedding.

At the time of the accident, they had already paid for the house with their common

assets.

On other hand, Maria has an apartment in Valencia that she inherited from her parents in 2019. She
gave her consent to have the flat respond as an asset for the loan subscribed by Jose and her with
Santander Bank to buy their house.

The worker claimed to the entrepreneur. Which goods respond to the worker's injuries?

Case 3

The administrators of the Hércules Football Club, S.A.D, given the economic difficulties it has, and
after paying numerous fines, for which they do not know what they are due, they decide to come to
you to help in the accounting and advise you on whether it is pertinent to register certain acts in the
Commercial Registry.

a) What books are required to be legalized? What is the Business Registry competent to proceed with
legalization?

b) Given the incompetence of one of the administrators, the partners of the company agree, by
majority, to replace him in office with another. Should this act be registered in the Business Registry?

c) Given the bad economic situation that Alicante CF is also experiencing, both teams are considering
their merger to reduce costs. Should the merger be registered in the Business Registry? Should it be
published? If so, specify where.

Publish in national newspapers

Case 4
Three people want to carry out a commercial activity. To do this, they decide to establish a Public
Limited Company and go to their law firm to receive advice.

a) They know that the main establishment will be in Spanish territory, although it will be located in
Alicante and its effective administration center will be in Seville. Where should the company's
domicile be established?

The company's domicile should be established where the administration center is Seville

b) From the granting of the deed until the registration in the Business Registry, a certain legal regime is
produced. Which is it? Who is responsible for the acts essential for registration?

Is company in formation

The administrator is responsible for the acts essential for registration.

Case 5

Three people have just formed a Limited Liability Company and decide to go to your office with the
following questions:

a) They have forgotten to include the corporate name in the company's by-laws. Could you tell them
what effect it has? Would it have any effect if, instead of not having written the company name in the
by-laws, all the share capital had not been disbursed at the time of incorporation?

No effect

Yes, it has an effect because if no payments have not been paid, they cannot vote.

b) If non-monetary contributions were made at the time of incorporation of the company, would their
valuation by an independent expert be mandatory? Who is responsible for the assessment given to
these contributions?

Yes, if I paid with goods instead pf money, someone must see if the goods have the same value as the
money

The valuation of an expert is compulsory, if in the future they realised that the value of the goods is less
than the value of the shares

c) Assuming that the company has a share capital of 3,000 euros, one year after registration in the
Business Registry, if it intends to acquire a certain asset whose value is 500 euros, is there any
requirement to carry out the acquisition?

Yes, if I have 3000€ I can buy 500€ if I demonstrate with funds that I have 3000€

Case 6
Ten people intend to establish a Limited Liability Company:

a) If a partner with unpaid shares transfers them. Does the transferor respond? If there is an
agreement to the contrary?

If I sell shares that in principle they are not paid.

The agreement applies.

b) They tell you that part of the shares will not be fully paid up. How should they be represented?
What if it is in a listed company?

We cannot have shares that we cannot pay so they should be eliminated.

Inform the national commission of national market

c) If the share capital is 100.000 euros, divided into 100.000 shares with a nominal value of 1 euro
each, could you tell me what the market value or real value of each share is? After one year, the
company's net worth has decreased to 80.000 euros. What is the net book value of each share?

The real value of each sgare is 1

The real value of the shares is 0,8.

Case 7

Three people, Francisco Martin, Josit Pérez and María Moreno, want to carry out a business activity.
They want to dedicate themselves to the transportation of goods within the national territory. To do
this, some friends have advised them to establish a Limited Liability Company with a share capital of
300,000 euros, but they are not very clear about what share capital is. Could you explain what it is and
what its functions are?

Furthermore, after obtaining information through the Internet, they have found out that to establish a
Limited Liability Company, a public deed and its registration in the Business Registry are necessary.
Could you tell them who is entitled to present the deed for registration and what its main effect is?

Capital share is the capital that come from the shares, its functions are voting

Any shareholder can do it, the effect is that as soon as the is registered it is constituted

Case 8

After one year since the constitution of a company, to take some decisions, the company's
administrators decide to call an extraordinary Shareholders' Meeting, which will be held on June 1,
2023. Among other decisions, the following are proposed: an increase in share capital by raising the
nominal value of the already existing shares, where the partners will be the ones to make the
disbursement of the new capital; and whether or not to dissolve the company (since they believe that
one of the causes established in article 363 LSC occurs, the manifest impossibility of achieving the
corporate purpose).

What quorum and what majority will be necessary to constitute and, if applicable, approve the two
matters? If any of the agreements adopted at the Meeting are contrary to the Law, could you say who
is entitled to challenge it? If the agreement is contrary to public order, will the same people be
legitimized? Until when can such agreements be challenged?

For the first matter the quorum has to be 100% unanimity

For the second one is 51%

If it is contrary to the law, 1% of the capital is entitle to challenge sheet

If it is contrary to public order,

there is no time limit.

Case 9

Diccionarios del Norte S.L., with a share capital of 6,000 euros, divided into 6,000 shares with a
nominal value of 1 euro each, wants to hold a Shareholders' Meeting to carry out a reduction of share
capital (the by-laws state that the nominal value of the social shares will be proportional to the voting
rights).

The social shares are in the hands of different people, distributed as follows: Miguel has 1,000
non-voting shares; John 2,000 with vote, Mary 1,000 with vote; Pablo 600 with vote; Pedro 400 with
vote; and 1,000 are in treasury stock. The Shareholders' Meeting is validly constituted and votes in
favor of the proposal are given by Juan and Pedro. Is the agreement valid?

Yes, because it is more than a 51%

Case 10

Transportes del Sur S.A. appoints Carmen Bermejo to carry out the permanent exercise of the
functions inherent to the position of General Manager. Then Carmen carries out a malicious act
contrary to the by-laws. causing harm to the company. Can a social liability action be brought against
Carmen?

Yes, the shareholders can go against any decision because it has been an intentional act

Case 11
On February 1, 2023, a Limited Liability Company is established where Miguel, Juan and Pedro are
appointed administrators. If the Board of Directors is not established, what way of organizing the
administration will be established? What would be the maximum duration of the position? If they
carry out an act that is contrary to the bylaws and that act is ratified by the Shareholders' Meeting,
would the administrators incur in liability?

If the corporate purpose of this company is the sale of oranges, lemons and strawberries, and the
administrator Miguel only has the power to represent the company with respect to the sale of oranges
and lemons, but not the sale of strawberries, and this limitation is registered in the Business Registry,
would the company be bound by a contract made by Miguel in relation to a sale of strawberries?

CONTRACT CASES

CASE 1

A lease agreement contained the following cause:

The tenant allocates the premises subject to this contract for the sale, repel;, exhibition and storage of
typewriters, calculating machines, accounting machines, office machines in general and accessories for
them, office furniture, sewing machines and their accessories, household appliances and parts related
to the detailed articles, and the premises may also be dedicated to the teaching and handling of the
machines or other elements mentioned."

Despite this clause, the tenant company also used the premises to market other products not
contemplated in the clause, consisting of stationery, fixed and wireless mobile telephony and
advertising services through mailings.

The lessor requested the termination of the contract by applying the literal content of the
controversial cause.
What should prevail: the literal interpretation of the contract clauses or the investigation of the real
will of the contracting parties?

The first rule that is established by the law is to interpret the literal interpretations then the will of the
contracting parties.

If a clause is clear enough, we don't need further interpretation. It states what can or can't be done.

CASO 2

Pedro, Maite and Juan are joint debtors for a total amount of 900 euros. If Pedro pays the entire debt,

1. How much can Pedro claim from Maite and Juan?

2. Can the creditor claim 900 euros from Juan?

3. Could the creditor have claimed 900 euros from Juan?

4. IF Maite is insolvent, how much can Pedro claim from Juan?

A creditor

Pedro, Maite and Juan debtors

If it is joint and several, you can ask anyone the total

If it is joint, you can ask each of them the corresponding part

1. Pedro could not claim anything since it is joint

2. No, because it is joint so no one can ask for 900
3. Nothing because it is joint

CASE 3

Maria, Rebeca and Jaime are joint and several creditors of Antonio for an amount of 1,500 euros.

1. Who does Antonio have to pay the debt to?

2. If Rebeca collects the entire debt, that is, the 1,500 euros, what amount can Maria claim from her?
And Jaime?

3. Can Rebeca carry out acts that are harmful to Maria and Jaime?

4. What would happen if Rebeca in turn owed Antonio 1,500 euros that she had lent him and the debt
was extinguished by compensation?

Joint and several, 2 creditor and one debtor.

Debtor 500 each creditor

 1. He can pay to any of the creditors because it is joint and several (pays to Rebeca, she has to
pay to maria her part)
2. Maria can claim the part that she gave to Antonio as a creditor
3. Dd
4. This would be compensated between Rebeca and Antonio since the own each other 1500
but Rebeca still owes Maria and Jaime 500 each.
(If it is no specified several and joint)

CASE 4

What conduct which can make consent/assent not valid is present in each case?

a) Pedro and Juan sign a contract for the sale of a vehicle and Juan thinks he is buying an "all-terrain"
vehicle, that is, with four-wheel drive, and it turns out that it only has front-wheel drive.

b) When purchasing a used car, the buyer knows that the vehicle may have some deterioration due to
use, a knock and/or aesthetic damage over time. However, at fist glance you cannot tell if there are
breakdowns and mechanical failures. The seller knows them, but does not mention it.

c) A person is forced to sign a contract while others hold him down.

d) In the sale of a property, one of the parties informs the other that if they do not sign the contract, a
member of their family will suffer some damage.

e) A father agrees to a marriage of convenience for his daughter.

A. Mistake, because Juan got confused when signing the contract about what he was going to
get
B. Fraud, the seller hides the failures of the car to the buyer
C. Duress, physical violence to achieve something
D. Duress, because is an improper threat
E. Undue influence, not accepted by the person affected

CASE 5

Company A owns a real property located in Madrid, which company B agreed to purchase. B signed a
contract for the sale of that property and mailed it to A on November 26. Subsequently, A placed it in
the mail addressed to B. After the contract was mailed but before it was received, A called B and
attempted to revoke the contract. Does a contract exist between them?

It has been a contract between A and B, the seller cannot revoke the contract since the offer was made
by the buyer.

Revocation can only be made by the offer.

CASE 6

Lucia and Zacarias met while having drinks in a restaurant. During the course of their conversation,
Lucia apparently offered to buy Zacarias' 471.6-acre farm for €50,000 cash.

Although Zacarias claims that he thought the offer was made in jest, he wrote the following on the
back of a pad: "We hereby agree to sell to Lucia the farm complete for €50,000, title satisfactory to
buyer." Zacarias then signed the writing and induced his wife to do the same. She claims, however,
that she signed only after Zacarias assured her that it was only a joke. Finally, Zacarias claims that he
was drunk but admits that he was not too drunk to make a valid contract, Is the contract enforceable?

● A contract can be sign on any type of support (servilleta)

● Yes, it obliges them (compromise). Valid.
● Requirements (consent, object which is real and cause/intention). If in the future it is proven
that it was a joke, the cause or intention wouldn’t exist so it could be void. But it is not the
case.
● If you are intoxicated is void but since he admitted he was not that drunk is valid.

Case 7

On May 20, cattle rancher Oliver visited his neighbor Manuel, telling him, "I know you're interested in
buying the land I'm selling." Manuel replied, "Yes, I do want to buy that land, especially because it
adjoins my property." Although the two men did not discuss the price, Oliver told Manuel he would
determine the value of the property and send that information to Manuel so that he would have
"notice" of what Oliver "wanted for the land." On June 13, Manuel called Oliver to ask if he still
planned to sell the land. Oliver answered, "Yes, and I should have the value of the land determined
soon." On June 17, Oliver sent a letter to Manuel listing a price quotation of €324,000. Manuel then
responded to Oliver by letter on June 21, stating that he accepted Oliver's offer. However, on June 24
Oliver wrote back to Manuel saying, "There has never been a firm offer to sell, and there is no
enforceable contract between us." Oliver maintains that a price quotation alone is not an offer.
Manuel claims a valid contract has been made. Who wins?

● Offer an acceptance has been made. This creates obligation. He can’t draw back because he
accepted it.
● Offer requirements (price and object). Both offers are achieved.

Case 8

Huffschneider Co. listed a property for sale with C. B. Real State Agency. The price was €165,000, and
the owners told C. B. that the property contained 6.8 acres. Juan, a salesman for C. B., advertised the
property in local newspapers as consisting of six acres. Hogstede Co. signed a contract to purchase the
property through Juan after first inspecting the property with him and being assured by him that the
property was at least 6.6 acres. In reality, the lot was only 4.6 acres. Can Hogstede Co. rescind the
contract?

● Yes, he can because one of the parties has lied.

● Consent is not valid because it is a fraud (less acres). Problem with the object because there
are less acres and the cause are okay.

Case 9

Maquinaria Elemental S.A., who has an equipment retail business, owed the bank more than €628,000
due to improper selling practices as well as business and inventory loans. Several times, its owner,
Federico, tried to persuade his parents to financially back his business debts, but each time they
refused, Federico then told his parents that, according to his attorney and the bank, he could be
prosecuted and sent to jail. Soon afterwards, David, the president of the bank, drove out to the
parents' house to convince them to sign as guarantors of Federico's debt. Both stressed to the parents
that unless they agreed to guarantee his debt, Federico would go to jail.

The mother asked that her attorney be allowed to read over the guarantee agreement, but David told
her that he did not have time to wait and that she must decide right then whether Federico was to go
to jail. As a result, the parents signed the agreement. Should the guarantee agreement be set aside
due to duress?

● Yes, because she was obliged due to duress (violence, threat...)

Case 10

Carolina ordered a €225 pair of contact lenses through an optometrist. Carolina paid €100 by check
and agreed to pay the remaining €125 at a later time. The doctor ordered the lenses, incurring a debt
of €110. After the lenses were ordered, Carolina called to cancel her order and stopped payment on
the €100 check. The lenses could be used by no one but Carolina. Will the doctor be able to recover
the money from Carolina?

● Yes because

Case 11

Yokel, a company dedicated to grow of soybeans, had sold soybeans to Campbell Grain and Seed
Company and other grain companies in the past. Campbell entered into an oral contract with Yokel to
purchase soybeans from it. Promptly after entering into the oral contract, Campbell signed and mailed
to Yokel a written confirmation of the oral agreement. Yokel received the written confirmation but did
not sign it or object to its content. Campbell now brings an action against Yokel for breach of contract
upon Yokel's failure to deliver the soybeans. Is the agreement binding?

● Verbal agreement is valid. There was an offer and acceptance verbally. Obligation exists. The
contract proves prior acceptance. Not signing doesn’t mean denial. He didn’t have to sign
the contract because just verbally is valid. Is still binding.

Case 12

Alice solicited an offer from Robett Manufacturing Company to manufacture certain clothing that Alice
intended to supply to the government. Alice contends that in a telephone conversation, Robett made
an oral offer that she immediately accepted. She then received the following letter from Robett,
which, she claims, confirmed their agreement:

Confirming our telephone conversation, we are pleased to offer the 3,500 shirts at $14.00 each and the
trousers at $13.80 each with delivery approximately ninety days after receipt of order.

We will try to cut this to sixty days if at all possible.

This, of course, is quoted fo.b. Atlanta and the order will not be subject to cancellation, domestic pack
only. Thanking you for the opportunity to offer these garments, we are

Very truly yours,

ROBETT MANUFACTURING CO., INC.

Explain whether the agreement is enforceable against Robett.

Case 13

Shane contacted Don, an employee of Al J. Hoffman & Co., to procure car insurance. Later, Shane's car
was stolen. Shane contacted Hoffman, who arranged with Budget Rent-a-Car for a rental car for Shane
until his car was recovered. Hoffman authorized Budget Rent-a-Car to bill the Hoffman Agency. Later,
when the stolen car was recovered, Hoffman telephoned Goodyear and arranged to have four new
tires put on Shane's car to replace those damaged during the theft. Budget and Goodyear sued
Hoffman for payment of the car rental and tires. Is Hoffman liable on his oral promise to pay for the
car rental and the four new tires? Why or why not?

Case 15

The company CLA buys from a farmer 1000 kg of vine tomatoes to make bottled gazpacho at a price of
10 euros per kg, setting the delivery date as June 1, 2023. Answer the following questions:

A. Is it a mercantile sale?
 B. If the farmer cannot deliver the tomatoes to CLA on the agreed date because the tomatoes
are not mature for the production of gazpacho, what alternatives does the buyer have?
C. In the contract it was agreed that the place of delivery of the tomatoes would be a garage
owned by CLA, so on June 1, 2023, the farmer delivered the 1000 kg of tomatoes to an
employee of CLA. That night there is a big storm that gets the tomatoes wet and spoils
them, making them unusable for gazpacho. What effects does this damage have?
D. Imagine that the tomatoes delivered by the farmer are of a different variety than the one
agreed upon, what remedies does the buyer have?

CONTRACT CASES II

Case 1

Do these situations create a contract? Why?

1 Juan owned a manufacturing plant that assembled cell phones. An audit determined that

several phones were missing. Theft by one or more of the workers was suspected.

Accordingly, under Juan’s instructions, the following sign was placed in the employees’

cafeteria:

Reward. We are missing phones. I want all employees to watch for thievery. A reward of

€500 will be paid for information given by any employee that leads to the apprehension

of employee thieves.

—Juan

Pedro, a plant employee, read the notice and immediately called Juan, stating, “I will

watch other employees and provide you with the requested information.”

It is a contract because there is an offer and an acceptance

2. Almost every day Sandra took a break at lunch and went to the International News

Stand—a magazine store—to browse the newspapers and magazines and chat with the

owner, Carlos. Often she bought a magazine. One day she went there, browsed a bit, and

took a magazine off the rack. Carlos was busy with three customers. Sandra waved the
magazine at Carlos and left the store with it.

There is a contract because Sandra was a typical customer. She made the offer and he didn't stop her so
it is assumed it was accepted.

3. On August 1, Ernesto wrote to Elisa offering to sell Elisa his car for €7,600, and he

promised to hold the offer open for ten days. On August 4 Ernesto changed his mind; he

sent Elisa a letter revoking the offer. On August 5 Elisa e-mailed Ernesto, accepting the

offer. Ernesto’s letter of revocation arrived on August 6.

The acceptance is valid as soon as is issued.

4. On August 1 Gerardo visited a local electronics shop to purchase a new television. He

saw one he liked but wasn’t sure if he could afford the €750. The store owner agreed to

write up and sign an offer stating that it would be held open for ten days, which he did.

On August 2 the owner changed his mind and sent Gerardo an e-mail revoking the offer,

which Gerardo received immediately. On August 3 Gerardo sent a reply e-mail accepting

the original offer.

If it was an offer it has to be complied with. The revocation came but it was an offer done for 10 days.

5. On a busy day just before April 15, Alberto received a call from a local car dealer. The

dealer said, “Hi, Mr. Alberto. Now, while you have income from doing clients’ taxes, I

have an excellent offer for you. You can buy a new Buick Century automobile completely

loaded for €36,000. Al, I know you’re busy. If I don’t hear from you by the end of the

day, I’ll assume you want the car.” Alberto, distracted, did not respond immediately, and

the dealer hung up. Then followed an exhausting day of working with anxiety-ridden tax

clients. Alberto forgot about the conversation. Two days later a statement arrived from

the dealer, with instructions on how Alberto should pick up the car at the dealership.

There can be acceptance by silence. It is valid.

Case 2
Who is entitled to claim for damages? Why?

1. Owner of an auto repair shop hires Contractor to remodel his shop but does not mention

that two days after the scheduled completion date, Owner is to receive five small Army

personnel carrier trucks for service, with a three-week deadline to finish the job and turn

the trucks over to the Army. The contract between Owner and the army has a liquidated

damages clause calling for €300 a day for every day trucks are not operable after the

deadline. Contractor is five days late in finishing the remodel. Owner wants to claim the

€1,500 as damages against Contractor as a consequence of the latter’s tardy completion

of the contract.

He cannot claim against the Contractor because he didn't mention the deadline regarding the work with
the Army.

2. Inventor devised an electronic billiard table that looked like a regular billiard table, but

when balls dropped into the pocket, various electronic lights and scorekeeping devices

activated. Inventor contracted with Contractor to manufacture ten prototypes and paid

him €50,000 in advance, on a total owing of €100,000 (€10,000 for each completed table).

After the tables were built to accommodate electronic fittings, Inventor repudiated the

contract. Contractor broke the ten tables up, salvaged €1,000 of Wood for other billiard

tables, and used the rest for firewood. The ten intact tables, without electronics, could

have been sold for €500 each (€5,000 total). Contractor then sued Inventor for the profit

Contractor would have made had Inventor not breached.

I have received money so I cannot ask for the other half if I have not delivered the goods.

3. The signals on a railroad crossing are defective. Although the railroad company was

notified of the problem a month earlier, the railroad inspector has failed to come by and

repair them. Seeing the all-clear signal, a car drives up and stalls on the tracks as a train

rounds the bend. For the past two weeks the car had been stalling, and the driver kept

putting off taking the car to the shop for a tune-up. As the train rounds the bend, the

engineer is distracted by a conductor and does not see the car until it is too late to stop.
The family of the driver can press carges becasue it was the fault of the railroad company.

Case 3

Chicago Prime Packers, Inc., a seller of pork ribs, filed suit against Northam Food Trading

Co., a purchaser of its ribs, in order to recover the purchase price of the product after

Northam refused to pay for ribs that arrived in bad conditions. Chicago Prime, a Colorado

corporation, and Northam, a partnership formed under the laws of Ontario, Canada, are

both wholesalers of meat products. Who is responsible for the damaged goods?

The responsible of the damaged goods depends on where the goods were damaged.

Case 4

Stein, a mechanic, and Beal, a life insurance agent, entered into a written contract for the

sale of Stein’s tractor to Beal for €6,800 cash. It was agreed that Stein would tune the

motor on the tractor. Stein fulfilled this obligation and on the night of July 1 telephoned

Beal that the tractor was ready to be picked up on Beal’s making payment. Beal

responded, “I’ll be there in the morning with the money.” On the next morning, however,

Beal was approached by an insurance prospect and decided to get the tractor at a later

date. On the night of July 2, the tractor was destroyed by fire of unknown origin. Neither

Stein nor Beal had any fire insurance. Who must bear the loss?

Stein apart from the seller has the obligation over the warehouse and the tractor. He must bear the loss.

Case 5

A seller had manufactured forty thousand pounds of plastic resin pellets especially for a

buyer, who agreed to accept them at the rate of one thousand pounds per day upon his

issuance of shipping instructions. Despite numerous requests by the seller, the buyer

issued no such instructions. On August 18, the seller, after warehousing the goods for
forty days, demanded by letter that the buyer issue instructions. The buyer agreed to issue

them beginning August 20, but never did. On September 22, a fire destroyed the seller’s

plant containing the goods, which were not covered by insurance. Who bears the risk of

loss? Why?

The buyer is responsible because he did not pick up the goods in time.

Case 6

Miguel purchased a mobile home, including installation, from Juan. Juan delivered the

home to Miguel’s lot. Upon inspection of the home, Miguel’s fiancée found a broken

window and water pipe. Miguel also had not received keys to the front door. Before Juan

corrected these problems, a windstorm destroyed the home. Who bears the risk for the

loss of the home? Why?

Since it is not in the hands of Miguel (because he didn't have the keys), the seller bears risk of the loss of
the home because of the damages.

Case 7

Colorado Fuel sold caustic soda to a buyer in Bombay. The soda was fully loaded aboard

a ship when a labor strike made it impossible for the vessel to sail. As a result, the soda

arrived in Bombay six months late. The buyer sued for the late shipment. Was Colorado

Fuel liable for damages? Does it matter that Colorado Fuel may have known that a strike

was imminent?

The carrier will be liable only if they had known about the strike.

Case 8

One lady was traveling by air from Rome to Philadelphia. Being highly allergic to gluten,
she had requested a gluten-free meal at the time she booked the flight. She again informed

the flight attendant that she required a gluten-free meal. She was served a vegetarian meal,

but it was not gluten-free. After taking a few bites she suffered an allergic reaction and

had difficulty breathing. Is the carrier liable?

The carrier is liable because she asked for gluten free and is related to the carrier obligations to comply
with her allergies.

Case 9

Is the principal liable? Why?

1. Parke-Bernet Galleries, acting as agent for an undisclosed principal, sold a painting to

Weisz. Weisz later discovered that the painting was a forgery and sued Parke-Bernet for

breach of contract.

If the principal is an expert in art then he is liable. Only if he knew that the painting is false.

2. Ralph owned a retail meat market. Ralph’s agent Sam, without authority but simulating

to act on Ralph’s behalf, borrowed €7,500 from Ted.

The principal (ralph) is not liable because the agent (sam) acting without authority. It is Sam’s fault.

3. A guest arrived early one morning at the Hotel Ohio. Clemens, a person in the hotel

office who appeared to be in charge, walked behind the counter, registered the guest, gave

him a key, and took him to his room. The guest also checked valuables (a diamond pin

and money) with Clemens, who signed a receipt on behalf of the hotel. Clemens in fact

was a roomer at the hotel, not an employee, and had no authority to act on behalf of the

hotel. When Clemens absconded with the valuables, the guest sued the hotel.

The hotel is liable because there was no one in charge of the reception to do their job.

4. A doctor in a University of Chicago hospital seriously assaulted a patient in an

examining room. The patient sued the hospital on the theory that the doctor was an agent

or employee of the hospital and the assault occurred within the hospital.
The principal (hospital) would be liable if the doctor is an employee. If the doctor was hired just for the
operation (agent) then his record could be analyzed and see if the Hospital was negligent. If it was
negligent then the hospital would be liable too.

Case 10

Kathy Knittle borrowed €20,000 from Bank to buy inventory to sell in her knit shop and

signed a security agreement listing as collateral the entire present and future inventory in

the shop, including proceeds from the sale of inventory. Bank filed no financing

statement. A month later, Knittle borrowed $5,000 from Creditor, who was aware of

Bank’s security interest. Knittle then declared bankruptcy. Who has priority, Bank or

Creditor?

The credit that is secured has priority over the one that is not secured. The bank has priority because it
has secured credit even if it is not registered.

Case 11

While waiting tables at a campus-area restaurant, you overhear a conversation between

two corporate executives who indicate that their company has developed a new product

that will revolutionize the computer industry. The product is to be announced in three

weeks. If you purchase stock in the company before the announcement, will you be liable?

Why?

You are not liable because it is incidental. It is not illegal.

Case 12

Eric was hired as a management consultant by a major corporation to conduct a study,

which took him three months to complete. While working on the study, Eric learned that

someone working in research and development for the company had recently made an

important discovery. Before the discovery was announced publicly, Eric purchased stock

in the company. Did he violate the law? Why?

People that have access to the document like managers, lawyers and consultants cannot benefit
themselves because they violated the disclosure by getting information that is not public. There was
intention.

Case 13

The commercial lending department of First Bank made a substantial loan to Alpha

Company after obtaining a favorable confidential earnings report from Alpha. Over

lunch, Heidi, the loan officer who handled the loan, mentioned the earnings report to a

friend who worked in the bank’s trust department. The friend proceeded to purchase stock

in Alpha for several of the bank’s trusts. Is the friend liable? Why?

The friend is liable only if that person knows that this information is not yet public.

Types of offers
● Seller → offer → buyer YES

Acceptance ←

● Seller → offer → buyer YES

Counter offer ←
→ Acceptance

● Seller → offer → buyer NO

Rejection ←
→ offer

● Seller → offer → buyer

→ Revocation

● Seller → offer → buyer

Acceptance ←

→ Revocation