Reference no: EM13932960

1. Edward Johnson III, the CEO and principal owner of the world's largestmutual fund company, Fidelity Investments, Inc., was a longtime tennis buddy of Richard Larson. In 1995, Johnson asked Larson, who had construction experience, to supervise the construction of a house on Long Pond, Mount Desert Island, Maine. Although they had no written contract, Larson agreed to take on the project for $ 6,700 per month plus lodging. At the end of the project in 1997, Johnson made a $ 175,000 cash payment to Larson, and he made arrangements for Larson to live rent- free on another Johnson property in the area called Prays Meadow in exchange for looking after Johnson's extensive property interests in Maine.

In the late summer of 1999, Johnson initiated a new project on the Long Pond property. Johnson had discussions with Larson about doing this project, but Larson asked to be paid his former rate, and Johnson balked because he had already hired a project manager. According to Johnson, at a later date he again asked Larson to take on the "shop project" as a favor and in consideration of continued rent- free use of the Prays Meadow home. Johnson stated that Larson agreed to do the job "pro bono" in exchange for the use of the house, and Johnson acknowledged that he told Larson he would "take care" of Larson at the end of the project, which could mean as much or as little as Johnson determined.

Larson stated that Johnson told him that he would "take care of" Larson if he would do the project and told him to "trust the Great Oracle" (meaning Johnson, the highly successful businessperson). Larson sought payment in March 2000 and asked Johnson for "something on account" in April. Johnson offered Larson a loan. In August during a tennis match, Larson again asked Johnson to pay him. Johnson became incensed, and through an employee, he ended Larson's participation in the project and asked him to vacate Prays Meadow. Larson complied and filed suit for payment for work performed at the rate of $ 6,700 per month.

Did Larson have an express contract with Johnson? What legal theory or theories could Larson utilize in his lawsuit? How would you decide this case if you believed Larson's version of the facts? How would you decide the case if you believed Johnson's version of the facts? [Larson v. Johnson, 196 F. Supp. 2d 38 (D. Me. 2002)

2. Bogart owed several debts to Security Bank & Trust Co. and applied to the bank for a loan to pay the debts. The bank's employee stated that he would take the application for the loan to the loan committee and "within two or three days, we ought to have something here, ready for you to go with." The loan was not made. The bank sued Bogart for his debts. He filed a counterclaim on the theory that the bank had broken its contract to make a loan to him and that promissory estoppel prevented the bank from going back on what the employee had said. Was this counterclaim valid?

3. Potomac Leasing Co. leased an automatic telephone system to Vitality Centers. Claudene Cato signed the lease as guarantor of payments. When the rental was not paid, Potomac Leasing brought suit against Vitality and Cato. They raised the defense that the rented equipment was to be used for an illegal purpose- namely, the random sales solicitation by means of an automatic telephone in violation of state statute; that this purpose was known to Potomac Leasing; and that Potomac Leasing could therefore not enforce the lease. Was this defense valid?MUST EXPLAIN ANSWER [ Potomac Leasing Co. V. Vitality Centers, Inc., 718 S. W. 2d 928 (Ark.)]

4. The New Rochelle Humane Society made a contract with the city of New Rochelle to capture and impound all dogs running at large. Spiegler, a minor, was bitten by some dogs while in her schoolyard. She sued the school district of New Rochelle and the Humane Society. With respect to the Humane Society, she claimed that she was a third- party beneficiary of the contract that the Humane Society had made with the city. She claimed that she could therefore sue the Humane Society for its failure to capture the dogs that had bitten her. Was she entitled to recover?

[Spiegler v. School District of the City of New Rochelle, 242 N. Y. S. 2d 430]