Reference no: EM131908455

Problem

Lord Berkeley Corp. recently concluded its discussions with Dewey, Cheatem & Howe, a mid-sized accounting firm, after rejecting a big-5 accounting firm's offer to undertake an annual company-wide audit at high hourly rates. Lord Berkeley Corp. has requested that its new accounting firm Dewey, Cheatem & Howe immediately commence work and complete their corporate audit within 60 days in order to minimize any disruption with regard to ongoing bidding processes and potential contracts.

Previously, Big-5 Accountants had proposed a fair flat project rate to Lord Berkeley in a writing that also indicated that "Accountants agree to use their best darn efforts in accordance with reasonable and professional practice standards to complete the requested corporate audit within sixty (60) days." Because of the time-sensitive nature of the work, the Big-5 Accountants Agreement also provided that "this Agreement and all offers contained herein shall be null and void if not signed, accepted and faxed within 48 hours of receipt by the Lord Berkeley Corp." Lord Berkeley Corp.'s President mailed a letter within 48 hours of his receipt to Big-5 Accountants that indicated that the hourly rates and everything else in the agreement was acceptable and, moreover, underscored that the audit work be performed and completed within 60 days. However, the President's Secretary forgot to fax the letter to the Big-5 Accountants before leaving work on the day that the letter was mailed and faxed a copy of the President's letter to the Big-5 Accountants' office first thing on Monday morning.

Later that same Monday morning, the President of Lord Berkeley Corp. received a letter from Dewey, Cheatem & Howe that advertised its accounting firm's work as "top rate quality" and "big firm quality" at rates lower than those quoted by Big-5 and other large accounting firms. The letter further indicated that Dewey, Cheatem & Howe could perform corporate audits within 30-45 days for a specified project rate that was less than the one the Big-5 Accountant firm had proposed. Attached to the letter were two articles from an accounting trade journal that detailed two ongoing investigations by the U.S. Department of Justice involving fraud allegations against Big-5 Accountants and several other large firms.

Upon reviewing the letter, Lord Berkeley Corp.'s President phoned Dewey, Cheatem & Howe and inquired further about their services. He was impressed with the conversation and the representatives of the firm who had indicated that they could without a doubt complete a corporate audit within 45 days. Overnight, the President considered the draft Agreement faxed to him by Dewey, Cheatem & Howe. On Tuesday, having heard nothing from the Big-5 Accounting firm, the President signed and faxed the Agreement back to the Dewey firm just before leaving the office at 5 p.m.

The next morning, the President received a call from the Big-5 Accounting firm advising that they are in receipt of his letter and asking for his permission to send a team of accountants to Lord Berkeley that afternoon to begin the corporate audit as soon as possible "in accordance with the Agreement reached." The President responded in that same phone call that they had no formal, written Agreement with the Big-5 firm. He also told them that Lord Berkeley Corp. hadn't heard from the Big-5 Accounting firm in two days and that in the interim, he had engaged another firm to do the work.

The Big-5 Accounting Firm forwarded a letter shortly thereafter to the President of Lord Berkeley Corp. and to Dewey, Cheatem & Howe demanding the right to perform the corporate audit, advising that it could still complete the required work within the original 60-day time frame and threatening to sue Lord Berkeley Corp. for breach of contract and Dewey, Cheatem & Howe for tortious interference with contractual relations. Lord Berkeley Corp.'s President insists he was correct, that he had no Agreement with the Big-5 Accounting firm, and requests your best analysis of the claims involved. He also asks whether he could countersue the Big-5 Accounting firm on any applicable legal grounds. Write a letter to the President responding fully to his concerns.