Knarles and Barkley Case Study
Liabilities under Contract Law
Chetum vs Knarles & Barkley
Fact: Knarles wants to repudiate a contract between Chetum and Barkley.
Issue: Breach of contract. Chetum entered into a contract with Barkley that Knarles, Barkley’s father and business partner, refuses to accept. Does Knarles repudiation of the contract constitute a breach of contract?
Rule of Law: A contract must have the following elements in order to be enforceable: (1) mutual consent, manifested by offer and acceptance, (2) consideration, (3) legality of object, and (4) capable parties (Calamari and Perillo, 1998).
Application: Barkley sent a contract (offer), which Chetum signed (acceptance), and Chetum sent his payment for the first month (consideration). Chetum and Barkley have formed a contract under which Barkley is to provide services to Chetum for some specific monthly sum. The services are maintenance of a building, a legal object. Therefore, Chetnum and Barkley have entered into a valid contract. Is the contract enforceable against Barkley?
Defense: Voidable Contract. Barkley is a minor, therefore he lacks contractual capacity and the contract is voidable by law.
Conclusion: The contract is void and not enforceable against Barkley.
Issue: Respondeat superior. Barkley was a minor. Nevertheless, Barkley was acting under Knarles’ authority and in the normal course of business when he entered into a contractual relationship with Chetum. Is the contract enforceable against Knarles?
Rule of Law: Under the rule of respondeat superior an employer or principal is legally responsible for the wrongful acts of an employee or agent, if such acts occur within the scope of the employment or agency (Calamari and Perillo, 1998).
Application: Although Barkley was acting within the scope of agency, Barkley’s contractual relationship with Chetum was not a “wrongful act” under respondeat superior; therefore, respondeat superior cannot be applied in this case.
Conclusion: The contract between Chetum and Barkley is void; therefore, Barkley is not liable for breach of contract. Knarles is not liable for breach of contract because no valid contract exists between Chetum and Barkley.
Remedies: But if Knarles were liable for breach of contract, Chetum would have to show damages to collect for breach of contract.
Expectation Damages: The victim of breach receives the benefit of the bargain; that is, the remedy is the value of performance promised minus the value of performance delivered. Knarles planned to reimburse Chetum for the first month’s payment, minus fees for services already rendered; therefore, Chetum suffered no expectation damages and he has no right to any other remedies.
Chetum vs Housewarm
Fact: Chetum bought a boiler manufactured by Housewarm. The boiler was defective.
Issue: Breach of implied warranty of merchantability.
Rule of Law. An implied warranty of merchantability is an unwritten and unspoken guarantee to the buyer that the goods purchased are fit for the ordinary purposes for which they are to be used. Two conditions must be met under the Uniform Commercial Code (UCC) for this warranty to apply: (1) the seller must be the merchant of such goods, and (2) the buyer must use the goods for the ordinary purposes for which such goods are sold (Calamari and Perillo, 1998).
Application: Chetum put the boiler to its intended use; however, he did not buy the boiler from a merchant of boilers but rather at a salvage yard. Therefore, the warranty does not apply in this case.
Conclusion: Housewarm is not liable for breach of implied warranty of merchantability.
Chetum vs The Salvage Yard
Fact: Chetum bought the defective boiler at a salvage yard.
Issue: Breach of implied warranty of merchantability.
Rule of Law. See supra.
Application: The salvage yard that sold the boiler to Chatum was not a merchant and cannot be held accountable for knowledge as to its merchantability. The boiler was sold as “salvage” not as a boiler for its intended use.
Conclusion: Housewarm is not liable for breach of implied warranty of merchantability.
The Plumber vs Knarles
Fact: Barkley failed to renew the plumber’s license.
Issue: Breach of contract.
Rule of Law. See supra.
Application. Knarles had the obligation to renew the plumber’s license under their contract. However, Knarles delegated his duty to renew the plumber’s license to Barkley, who forgot to do so. The license was not renewed by Knarles.
Conclusion: Knarles is liable for breach of contract for not renewing the plumber’s license.
Remedies: To recover, the plumber would have to show that he suffered damages as a direct result of not having had his license renewed. The facts do not support it.
Tenants vs Knarles
Fact: Knarles and Barkley failed to replace the boiler in Chetum’s building, a duty included in their building maintenance responsibilities.
Issue: Breach of contract-Third party beneficiaries. Are Knarles and Barkley liable to Chetum’s tenants as third party beneficiaries for breach of contract in failing to replace the boiler?
Rule of Law: A person who may have the right to sue on a contract, even if the person did not participate in the original formation of the contract. A right of action arises only when (1) the object of the contract was to benefit the third party's interests, and (2) the third-party beneficiary has either relied on or accepted the benefit (Calamari and Perillo, 1998).
Application: The purpose of the contract between Chetum and Barkely, and by extension through agency, between Chetum and Knarles was to maintain the residential premises, a benefit for the tenants. The tenants expected their residential premises to be maintained for their benefit, so one can argue that they had accepted the benefit of the contract. The tenants will argue that Knarles breached the contract because Knarles failed to maintain the residential premises as promised in the contract.
Conclusion: The tenants may be able to recover from Knarles if the court rules that they qualify as third party beneficiaries under the Knarles-Chetum contract.
Remedies: The tenants could recover for any damages that resulted as a direct result of breach of the Knarles-Chetum contract.
Liabilities under Property Law
Tenants vs Chetum
Fact: The tenants in Chetnum’s building were hospitalized for carbon monoxide poisoning due to improper ventilation by the faulty boiler.
Issue. Breach of implied warranty of habitability.
Rule of Law: A lease between a landlord and a tenant has an implied warranty that the residential premises are habitable. Any building code violation is to be considered evidence of uninhabitability. To prove uninhabitability, the tenant must show that the conditions not only violate the building code, but are also a substantial threat to the tenant’s health or safety (Calamari and Perillo, 1998).
Application: It appears that the boiler was installed in violation of the building code; it was a Housewarm boiler that had been recalled by the manufacturer because of a dangerous defect; furthermore, the boiler was not installed properly. The defective boiler sickened the tenants in Chetum’s building and had to be hospitalized, representing a substantial threat to the health and safety of the tenants. Therefore, Chetum’s building was uninhabitable.
Conclusion: Chetum is in breach of implied warranty of habitability.
Liabilities under Tort Law
Tenants vs Chetum
Fact: The tenants in Chetnum’s building were hospitalized for carbon monoxide poisoning caused by improper ventilation in the faulty boiler.
Issue: Negligence.
Rule of Law: To recover under an action based on negligence the following elements must be present: (1) defendant owed a legal duty of care to the plaintiff, (2) defendant’s negligent behavior resulted in breach of this duty, (3) plaintiff suffered actual harm, (4) harm was the result of the defendant’s negligence, (5) defendant’s negligence was the proximate cause of the harm, and (6) the harm was foreseeable by a reasonable person (Keeton, 1984).
Application: Chetum was the tenant’s landlord, as such he owed them a duty of care. Chetum’s refusal to exchange the Housewarm boiler for another boiler after being told by the plumber that the Housewarm boiler was defective was a negligent act that resulted in Chetum breaching his duty of care to the tenants. The tenants were hospitalized due to carbon monoxide poisoning, suffering actual bodily harm and presumed monetary damages. The carbon monoxide poisoning was a direct result of Chetum’s breach of duty of care. Chetum had been forewarned that the Housewarm boiler’s faulty ventilation system did not ventilate the carbon monoxide properly, thus the harm to the tenants was foreseeable.
Conclusion: Chetum is liable for negligence.
Fact: The Housewarm boiler in Chetum’s building was a model that had been recalled by the manufacturer because it was dangerous. Residential buildings are governed by safety statutes. There exists a strong possibility that Chetum violated a safety rule.
Issue: Negligence per se.
Rule of Law: An unexcused violation of a safety statute that applies to the facts of the case may be considered negligence per se, conclusively establishing that the defendant was negligent. The statue must have intended to guard a certain class of persons against the type of injury actually suffered by the plaintiffs (Keeton, 1984).
Conclusion: The existence of a safety statute regarding boiler specifications will result in Chetum being found liable for negligence per se.
Issue: Emotional distress.
Rule of Law: If the court finds the defendant liable for negligence, the court may also find the defendant liable for emotional distress when physical harm is present (Keeton, 1984).
Remedies: The tenants may recover for actual monetary damages, compensation for emotional distress, and if the court finds that Chetum’s act of refusing to discard the old recalled Housewarm boiler for a new one falls under “careless disregard of duty of care,” the court may award the tenants punitive damages.
Fact: The tenants became ill due to carbon dioxide poisoning from the boiler in their residence.
Issue: Battery.
Rule of Law: The following elements must be proven to establish a case for battery: (1) an act by a defendant; (2) an intent to cause harmful or offensive contact on the part of the defendant; and (3) harmful or offensive contact to the plaintiff (Keeton, 1984).
Application: Chetum’s decision to keep the defective boiler was an act by Chetum. However, although the contact to the tenants was harmful, the fact pattern does not support that Chetum acted with intent to cause harm or offensive contact to the tenants.
Conclusion: Chetum is not liable to the tenants for battery.
Tenants vs Knarles & Barkley
Fact: The tenants in Chetnum’s building were hospitalized for carbon monoxide poisoning caused by improper ventilation in the faulty boiler serviced by Knarles agent.
Issue: Negligence.
Rule of Law: See supra.
Application: Did Knarles owe the tenants a duty of care? Barkley, Knarles’ son and business partner, entered into a contract with Chetum to maintain the residential premises for Chetum’s tenants. This may or may not confer on Knarles a duty of care to the tenants. But if it did, did Knarles breach his duty of care to the tenants? Barkly, acting as Knarles’ agent, knew that the boiler was defective when he instructed the plumber to heed Chetnum’s request to “fix” the boiler instead of having it replaced by a new one. Thus, Knarles via Barkly breached his duty of care. The rest of the elements are as in Tenants vs Chetum supra.
Conclusion: If the court finds that Knarles had a duty of care then Knarles may also be found liable for negligence.
Remedies: Same as for Tenants vs Chetum supra; except, the court may not find Knarles showed “careless disregard” and Knarles may thereby avoid punitive damages.
Liabilities under Criminal Law
Tenants vs Chetum
Fact: The tenants became ill due to carbon dioxide poisoning from the boiler in their residence.
Issue: Battery.
Rule of Law: See supra, Tenants vs Chetnum, battery. However, in criminal law, the intent element is satisfied when the act is done with either intent to injure or with criminal negligence. Criminal negligence is failure to use care to avoid criminal consequences. The intent for battery in criminal law is also present when the defendant's conduct is unlawful even in the absence of criminal negligence (Perkins and Boyce, 1995).
Application: Chetum’s decision to keep the defective boiler was an act carried out with criminal negligence. But if not, intent is present in Chetum’s presumed violation of safety statutes, an unlawful conduct. Assuming that the court accepts carbon monoxide molecules as objects that are touching a body, there was harmful contact to the tenants. Also, there was no consent.
Conclusion: Chetum may be liable to the tenants for criminal battery.
Remedies: No remedies under criminal law. Instead, the defendant will have to pay a criminal penalty. However, Chetum’s conviction on battery charges may support the tort cases against Chetum.
Fact: Chetum installed a defective boiler in his building. It is presumed to be against safety statutes.
Issue: Violation of Safety Statute.
Rule of Law: Unknown but presumed to exist.
Conclusion: Chetum may be guilty of violation of safety statute.
Penalties: Unknown but presumed to exist.
Fact: The plumber’s license was not valid when he worked on Chetnum’s boiler.
Issue: Violation of Statute.
Rule of Law: A person must be licensed to work as a plumber.
Conclusion: Chetum was guilty of violation of statute.
Penalties: Unknown but presumed to exist.
Jurisdiction
Issue: In personam jurisdiction. Does the court in Virginia have in personam jurisdiction over Knarles, a resident of Maryland, and the plumber, a resident of the District of Columbia?
Rule of Law: A court has in personam jurisdiction over a defendant if the defendant has continuous and systematic minimum contact with the state OR if the defendant committed a tort within the state (Glannon, 1997).
Application: Although Knarles is a resident of Maryland, and the plumber is a resident of the District of Columbia, they both conduct business on a regular basis in Virginia. They might also both end up being sued for any of the torts discussed supra.
Conclusion: The court in Virginia has in personam jurisdiction over Knarles and the plumber.
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Keeton, P. (1984). Prosser and Keeton on the law of torts. St. Paul, MN: West
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Perkins, R., & Boyce R. (1995). Criminal law. Third edition. Mineola, NY: The
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