Reference no: EM133472738

Sneak E. Sell is a salesperson for Yellow Pages, Inc. He went to No-Tell Motel, where, behind the desk, he met the desk clerk, Terri Toodumb, who was employed by No-Tell Motel and who introduced herself to Mr. Sell as the motel "manager." No-Tell Motel is merely the trade name for the real name of the business, which is a corporation with the legal name of See No Evil, Inc, a corporation properly organized and operating under the laws of the Commonwealth of Pennsylvania. See No Evil, Inc., also owns the real property on which the motel is located. I.M. Cheap is the sole shareholder, officer, and director of this corporation.

Mr. Sell convinced Ms. Toodumb to sign an agreement for a one-quarter page advertisement in the 2017-2018 telephone directory for Montgomery County, which was to be printed and distributed shortly. Mr. Sell presented Ms. Toodumb with Yellow Pages, Inc.'s standard form of contract with See No Evil, Inc.'s name listed as the "advertiser." Mr. Sell presented the form of contract to Ms. Toodumb on a "take-it-or-leave-it" basis; in other words, the terms were not negotiable. Ms. Toodumb signed the contract for the advertiser as "manager." The total bill, to be paid monthly, was $6,000.00.

Thereafter, Ms. Toodumb told Mr. Cheap that she had signed a contract on behalf of No-Tell Motel for a one-quarter page Yellow Pages ad in the upcoming phone book. Mr. Cheap did not see a copy of the contract or the ad, but he assumed that he would receive a bill shortly. Soon after the telephone book was published and distributed, Mr. Cheap received in the business mail delivered to the See No Evil, Inc., office an invoice in the amount of $500.00 directed to No-Tell Motel. Believing that this bill constituted the entire charge for the advertisement, Mr. Cheap wrote a business check made payable to the Yellow Pages, Inc., in the amount of $500.00 and drawn on the corporate bank account, which is titled "See No Evil, Inc., d/b/a No-Tell Motel."

Approximately one month later, Mr. Cheap received another nearly identical invoice for $500.00 in the business mail. Believing that he already had paid this invoice and that his check and this invoice had crossed in the mail, he disregarded the invoice. Approximately one month later, Mr. Cheap received a third invoice for $500.00 in the business mail, this time with a "past due" indication. Again, believing that he already had paid this invoice, and that the phone company simply made a clerical error, he disregarded the invoice.

Approximately 30 days later he received in the business mail a fourth invoice and a "reminder statement" from the phone book company. His receipt of these two documents caused Mr. Cheap to take a closer look. Upon inspection, Mr. Cheap realized that his company was being charged $500.00 per month, not per year. He telephoned the Yellow Pages, Inc., and politely informed that company that it had made a mistake since his company was to be charged only $500.00 for the entire year, not $500.00 per month. After some checking, the representative from Yellow Pages, Inc. assured Mr. Cheap that he was mistaken, and the company referred him to the contract, a copy of which the company e-mailed to Mr. Cheap. The written contract indicated the total bill was $6,000.00 for the year, to be paid in equal monthly installments.

Upon his receipt of the contract, Mr. Cheap explained to Yellow Pages that Ms. Toodumb, who no longer works for No-Tell Motel, was not authorized to enter this contract. He said he would not pay anything more, and he asked that the ad be removed if $6,000.00 was the true price. The telephone company told Mr. Cheap that the ad could not be removed, that the phone books already had been distributed, and Mr. Cheap must "pay up or else."

1. See No Evil, Inc., whose only shareholder is Mr. Cheap, is a private, for-profit, domestic, S-corporation commonly referred to as what kind of corporation?

2. Analyze and evaluate separately and in detail the strengths and weaknesses of each of the possible claims and defenses by and against each possible party. Who should win a lawsuit? Who should lose?

3. Would your answer to subpart (B) above change if when See No Evil, Inc., hired Terri Toodumb she signed a covenant not to compete that precluded her from working for another motel or hotel within a 500-mile radius of No-Tell Motel for 10 years? Why or why not?

4. What is the name we attribute to the type of contract Mr. Sell presented to Ms. Toodumb? Hint: "installment" is not the answer I want.

5. Circle one sentence in the foregoing fact-pattern part of this question that is in Passive Voice and write the letters "V" next to that sentence.