Reference no: EM1321644

Mr. Simmons owned and operated a bakery and sought to obtain a supermarket franchise with Cardinal Stores. Cardinal Stores assured Simmons that his $18,000 was sufficient and advised him to acquire and operate a small store to gain experience. Three months later Cardinal Stores advised him to sell that store with the assurance that he would be given a larger store. Simmons was reluctant to miss the summer tourist season but sold the store on Cardinal's assurances.

A few months later Cardinal told Simmons "everything is ready to go. Get your money together and we are set." Cardinal told Simmons to raise the rest of his financial contribution by selling his bakery. Simmons sold the bakery for $10,000 and took a job on the night shift at a local bakery.

Cardinal next informed Simmons that he would have to contribute a greater amount of money. Simmons obtained the money from his father-in-law. Cardinal then told Simmons that he would have to sign an agreement that the loan from his father-in-law was either a gift or a loan subordinate to all general creditors. Negotiations terminated and Cardinal refused to sell Simmons the franchise. Simmons sued Cardinal for reliance damages, lost profits, and expenses.

Cardinal's defense was that the parties had never reached agreement on essential factors necessary to create a valid contract. What should the court's judgment in this case be?

Discuss the legal issues that arise in this case: Is there consideration to support this agreement? Can the court enforce this agreement in equity? What theory or theories apply to the facts of this case?