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1. Based on the text reading regarding Business Ethics, Cyber Law, and consider the legal elements of Contracts: (1) writing, (2) interpretation, (3) breach, (4) remedy, and (5) discharge. Please discuss the relevance of each Contract element regarding a 16 year old that enters into an online contract and purchases $5,000 of items from an online store without parental consent. Write one sentence to explain the application of each of the five elements of the contracts.
2.Based on the text reading regarding Business Ethics and Contracts, respond to the following:
Most online retailers are aiming for delivery as fast as they can get the goods out the door. However, Zulily, Inc. has a different approach. It is remaining solvent by following a slow delivery policy — on average about two to three weeks to get the ordered goods to its buyers. Purchases of brand items such as Spanx and Crocs can take about a month to arrive. See: Serena Ng, “Zulily’s Secret to Profit Means Slow Deliveries,” Wall Street Journal, May 5, 2014, p. B1. Amazon, QVC, and voerstock.com have average delivery times of three to four days.
Zulilly has was the Wall Street Journal refers to as a “bare-bones distribution system.” The company does not purchase inventory in advance; it waits for the orders and then orders its shipment from manufacturers. Zulilly also does not accept returns — all sales are final.
However, the end result of the no-inventory and no-returns policies is that the prices at Zulilly are much lower than other online retailers.
The company is building a strong customer base through its focus on deals of the day, and its customer count was double ion 2013 what it was in 2012. See: http://www.king5.com/news/technology/Behind-the-scenes-at-rapidly-growing-Zulily-254830881.html
But, shopping at Zulily requires an understanding of the terms in advance. In fact, before you gain access to the site, you must fill in your e-mail address, which represents and acknowledgement that you agree to abide by Zulilly terms and conditions. Here are the critical terms and conditions that are so different from other online retailers:
2.3 Orders. Your receipt of an order confirmation from us does not signify our acceptance of your order, nor does it constitute confirmation of our offer to sell. We reserve the right at any time after receipt of your order to accept or decline or cancel your order (in whole or in part) for any reason. We may require additional verifications or information before accepting any order. Your order is not accepted until it is shipped (or a portion of the order is shipped). Notwithstanding the foregoing, you agree that, if we cancel all or a part of your order, your sole and exclusive remedy is that we (a) issue a credit to your credit card or PayPal account in the amount charged for the cancelled portion (if your credit card has already been charged for the order) or (b) not charge your credit card or PayPal account for the cancelled portion of the order.
2.5 Shipping Policy Any delivery dates provided by zulily are estimates. zulily reserves the right to make deliveries in installments. zulily will send you an email when your order has shipped and you may review your order and shipping information on your zulily My Account page. We ship within the US (including Alaska, Hawaii and APO/FPO/DPO addresses), and to Canada, UK and more than 80 other countries.
2.6 Return Policy
(a) Return Policy. zulily will only accept returns on products that are identified on the Product information page as eligible for return or as provided in Section 2.6(c). Once zulily confirms that your Product was returned in accordance with Section 2.6, your sole and exclusive remedy is a store credit in the amount charged for the applicable Product; provided that the credited amount will not include the applicable Delivery Fee, which is nonrefundable. Store credits may only be used for future purchase of Products on the Web site (excluding gift cards) and are subject to the restrictions set forth in Section 14.
(b) Exchanges. We do not accept any Product exchanges.
The bottom line is that Zuliy can ship goods if it has the goods and will do so when it does and you agree to the delay by signing in. You also agree that the sale is final — you cannot return or exchange the goods. Zuliy is a no-nonsense inline retailer. Consumers who use the sight need to understand the terms of contracting for those terms require a waiver of timely performance and the right to return non-conforming goods. The contract terms and discounts may not cover for the delays — as one customer noted, “What’s the point of saving $15 if you have to wait six weeks?”
The Federal Trade Commission rules only require consumer notification and the right to cancel for delayed delivery, but Zulilly has that all covered through its upfront disclosure and the buyer’s agreement to abide by those longer shipping terms.
DISCUSSION STARTERS
1. Explain the terms of contracting with Zulily.
2. Why don’t the FTC rules on disclosure apply?
3.Based on the text reading regarding Business Ethics and Contracts, please respond to the following:
What’s a McDonald’s French fry without some ketchup on it? For 40 years, in locations outside the United States, the ketchup on your burger would likely have been produced by Heinz. That company, located in Pittsburgh, Pennsylvania, is the world’s largest maker of ketchup. Despite the long relationship between the two companies, McDonald’s is terminating its contract with Heinz.
Can McDonald’s end the association without liability? To answer this question, look first to the terms of the agreement. McDonald’s and Heinz’s contract is not publicly available but we can anticipate that it includes a provision addressing its duration. That provision might state that the agreement is in effect for a specified number of years, at the end of which the parties repeatedly renegotiated satisfactory terms and extended the contract for another stated period of time. At the end of each period, neither party is obligated to negotiate an extension. The first essential element of a contract is agreement, meaning both parties must concur that they want to enter or remain in a contract with each other. Stated differently, contracts are voluntary; nothing requires a business to contract with another.
As an alternative to a specified duration, the contract may have an automatic renewal term meaning at the end of the specified duration of the contract, it automatically renews without the need for renegotiation. Such a clause might well include a stipulated price increase to kick-in at the start of each renewal period.
The contract between McDonald’s and Heinz likely contains a termination clause. Such a clause details the procedure to follow when a party decides to end the agreement. Typically, such clauses require the party wishing to terminate to give written notice to the other. These clauses also customarily include a time period before termination when notice must be given, often 30, 45 or 60 days. The party seeking to end the contract remains liable to perform its contractual commitments during this time period. Sometimes termination clauses include a financial penalty. McDonald’s will read its contract carefully to determine how to exit from the relationship with Heinz with the least amount of liability.
What prompted McDonald’s to seek other ketchup suppliers? McDonald’s explained the circumstance as a result of recent management changes at Heinz. Keep in mind the stiff competition between McDonalds and Burger King. Fold in the facts that a former Burger King CEO, Bernardo Hess, was recently hired to head Heinz, and he continues to serve as vice-chair of Burger King’s board of directors.
The same company owns Heinz and a controlling share of Burger King. That company is 3G, owned by Warren Buffett. Some analysts predicted months ago that 3G might itself cancel the contract to deprive McDonald’s of a popular product. Of Burger King’s US stores, 80% serve Heinz.
For more information, see: http://www.huffingtonpost.com/2013/10/25/mcdonalds-heinz-ketchup_n_4164898.html
DISCUSSION QUESTIONS:
1) Under what circumstances would McDonald’s be liable for breach of contract?
2) Under what circumstances would McDonald’s not be liable for breach of contract?
4.Based on the text reading regarding Business Ethics, CyberLaw and the legal elements of Contracts:
Who Pays When the Heater Gets too Hot?
Roger Meiners
The television retail sales channel QVC ordered 28,000 Soleus-brand space heaters from MJC America (d/b/a Soleus), which had the heaters produced in China. As the picture above shows, these were stand-alone heaters.
Soon after sales began, QVC got reports about heaters catching fire and other problems. The company investigated and discovered problems that it discussed with Soleus. It investigated and asserted that there was no fire hazard and that some customers “may have used this heater improperly.”
QVC hired an independent testing company, Intertek, to evaluate the heater. It found poor construction that could be a fire hazard. QVC ordered a recall. It sent a letter to all customers saying there was a recall so that payment could be refunded. It also notified Soleus that it was revoking acceptance of the heaters because of safety problems. QVC said it would notify the Consumer Product Safety Commission and would hold Soleus responsible for all “costs, liabilities, damages and expenses” related to the problem.
The contract stated that the heaters would comply with all regulations and standards and “shall be free from all defects (including latent defects) in workmanship, material and design.” The contract noted that in case of a problem, it would refund money to the customers and hold the product vendor liable.
QVC sued for $1.8 million in damages plus attorneys’ fees. QVC sold the heaters for $67.86, of which Soleus received $36 and $5 was paid to third parties for functions related to the transaction, so QVC had net revenue of $26.50 per heater.
The federal district court held for QVC. See: http://www.courthousenews.com/2012/10/26/QVC.pdf
There was a breach of contract. It recovered payment made for the heaters as yet unsold and returned to Soleus. It recovered the costs of the recall, shipping costs, and the lost profits due to the refund. The heaters were clearly defective and, as the contract stated, Soleus was responsible for all costs related to the recall.
Discussion:
1. Should the producer bear all of the cost or should the retailer share in that cost? Why?
2. Should the Chinese producer be responsible?
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