Law School Discussion



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« on: March 12, 2005, 07:28:56 PM »
An older student, realizing that I was looking for a job, (he overheard me talking to somebody about a job) stated and I quote:  "Why don't you come to work for me. I'll pat you 1500 a week net."  I took this offer to be in jest because I know the guy, and how in the hell does he know what I am going to net (after taxes)?

I decided to confront him and asked him if his offer was for real.  He said, absolutely, I don't joke about business.  He told me I need to get certified as a SMOG technician, and once I do, he will open up a shop, I run it, he trains me, after a year, I buy the shop from him.

I asked how do I know you will do this if I get certified?  He says, look, this is a K,
A promise for a promise, a bilateral K.  I promise to open up a shop for you and pay you 1500 a week net if when you show me your Smog license.  I said how do you know how much the shop will make?  He says it doesn't matter, if the shop loses money, you still get paid 1500 net per month for a year.

After all was said and done, I said "I think I am going to advantage of your offer."  He says the offer is open indefinetly to me because he has been burned before, and trusts me.  We shook hands, and I said "deal"

When I said "deal", did I make a promise?

The guy is very wealthy and really has nothing to lose.  What is his consideration then?  He isn't giving up anything.  It's contingent upon  me to get certified, therefore, I have created a detriment or benefit (1/2 glassful of water) and consideration on my side is not a problem.   What has he given up?  He is not doing anything UNLESS I get certified.

Since this is a Bi K, it is already in existance, I can breach by not getting certified, he can breach by not giving me a shop.  It seems I am missing something, and something just doesn't smell right.  Since the Bi K is already enforceable, he breaches by not opening a shop, he is out nothing, but I could sue, and should win 1500 a week for a year in damages, and even the cost of acquiring the certification  Correct? 

Obviously I won't spend the money to get certified until the exact terms are spelled out in a written agreement.  The problem is, he doesn't like written agreements, and if I ask him, he may be offended that I don't trust him.  He bases his success on the fact that his customers trust him, and he olnly makes offers like these to someone he nows he can trust.  I asked him if I could hire an employee to do the more difficult repairs, he said "Absolutley not. If your shop gets busy and you can't handle it alone, I will send one of my empolyees to your shop.  Thid is so similar to franchise type business, yet it is not as he has control over me and the shop.

Thoughts?  Helpful suggestions? 



« Reply #1 on: March 12, 2005, 08:32:29 PM »
Could this possibly be an illusory promise because it is contingent on you getting certified and you may never get certified? 

« Reply #2 on: March 13, 2005, 12:26:44 PM »
Swifty, you seem to have broken it down to the bare elements of K law already.

First of all, when you said "Deal" there can be little question that this physically overt action is sufficient enough to manifest your assent to the deal.  You both subjectively knew you were agreeing to the deal and it can easily be infered objectively that you both knew you were agreeing to the deal.  So we have a deal.

You ask about the consideration, as in what he gave up as the promisor.  Well since he is the promisor consideration is not about what he gives up, its about what YOU give up as the promisee. Your detriment is you having to go out on your own and get your SMOG license. You didn't have to do that, and after your deal was made, it is understood by both parties that you are not taking steps toward obtaining your SMOG license for the hell of it; you are doing it in order to satisfy the deal.

As the promisor, the older student receives the benefit of having a shop with a SMOG technician; apparently something he did not have before that is of value to him.  Your SMOG liscence will provide an overall benefit to him and his business for years to come and is the basis of your deal.

So we have a deal and we have consideration:
1. Detriment to the Promisee
2. Benefit to the Promisor
3. Bargained for Exchange

While this sounds like something that more than likely would fall under the statute of frauds, you know the guy better than us.  If a written agreement will end up pissing him off then it may be best to take the oral K in this situation if getting your SMOG license will not be too much of a stretch for you.  I have no idea what is involved in obtaining such a license.  If it takes a few months and doesn't cost too much I wouldn't raise the issue of the written K.  If it takes a few years and is going to cost a lot of money for you, then I might have to ask the guy for the written deal.

my 2 cents but what do I know, I got a B in contracts :P

« Reply #3 on: March 13, 2005, 04:08:43 PM »
Okay--I'm not going to pretend I'm any sort of contracts genius, but I think the problem is that you're looking at the consideration in benefit/detriment form.  There are two promises with consideration.  The first is the promise that you obtain a SMOg license and he will employ you.  The second is that you work for him and he pays you.  The fact that you have to get a SMOG license is also condition precedent to the actual deal.  The other guy's duty to employ and pay does not arise unless you obtain a SMOG license.  (Your working is also a condition precedent to his paying you--but this one I'm sure you knew).  If you do not obtain the license there has been a material failure of performance, and his duty to employ you is suspended.  Also considering the promise to obtain a SMOG license as a promise, if you do not obtain the license you have breached the contract, because non-performance at any time when performance is due is a breach.  Since the non-occurrence of the condition would suspend and ultimtely discharge his promise to employ/pay, it would be a total breach.  He could recover damages if he could prove the loss with certainty and show it was foreseeable. However, if you obtain the license and he then does not employ/pay you, he has breached the K and you would be entitled to seek damages for up to one year (because a contract not to be performed within one year is not valid under the statute of frauds if it is only oral).  You might not be able to get damages for $1500/month net, but you'd get fmv for the work I'd imagine (damages is not my strength!).

I think you'll be able to figure it out if you stop thinking in terms of benefit/detriment--consideration doesn't have to hurt one and help one--my contracts prof made this point often. 

Hope this might help.


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« Reply #4 on: March 15, 2005, 07:17:57 PM »
I think the problem here is that this could perhaps be construed as agreeing to an option, not on the final contract. You have an option you can exercise by presenting your SMOG license. But offers without consideration are not binding, so he could revoke any time before you show him the license. Not to mention that it'll just be your word against his.

If this is a contract and you "breach" by choosing to devote your energies elsewhere, I have a hard time seeing what damages he could claim. He would, of course, have a duty to mitigate. Considering how easily he talked you into this, he should be able to find someone else for little cost.

You run the risk of making a large expenditure of money/time/effort for potentially no return. He doesn't like written agreements--I don't like people who don't like written agreements. You shouldn't either; at least not when you're doing business with them and don't have some other significant relationship with them to make them more credible to you.

I'd say get it in writing, or at least agree to tape record an oral agreement that makes it explicit that if you get the license, you have a $1500/wk job. If he's ok with tape recording, I'd be less nervous. If he's apprehensive, it means the reason he doesn't like written agreements is because he doesn't like enforceable agreements.