An Analysis of Turnip Plaza Case Report
In past sessions of this class, students have struggled with Turnip Plaza Case report, so I’m providing some tips here:
There are three question sets you are asked to answer in this report. I suggest you organize your Turnip Plaza Case report by question (with an introduction at the beginning and recommendations at the end, and the questions in order in between). The questions are contained in Project 2: Step 1: “the Turnip Plaza Hotel Case File.” This file also contains the essential facts of the scenario. The facts are very important.
- The first question asks about “legal theories.” These theories (aka, causes of action) are covered in the “contract formation and execution” learning topic in Step 2 of Project 2. Please read the material carefully and identify the theories and elements, and explain how the elements are or are not satisfied. Also write about related doctrines from the reading that may impact the outcome of the application of these theories.
- The second question asks about remedies. The remedies are covered in the “contract remedies” learning topic in Step 2 of Project 2. The remedies directly correlate to the theories identified in response to the previous question. Tort damages are different than contract damages. Keep in mind that some remedies may not be available here, and you should identify those that are, and explain them.
- The third question asks you to apply ethical theory. You should identify and apply the tests or theories on ethics contained in the “ethical business decision making” learning topic in Step 2 of Project 2. Utilize multiple theories and explain (I) the theory, (ii) how the theory applies to the facts of the scenario – that is, your reasoning, and (iii) your overall conclusions.
Introduction on Turnip Plaza Case Report
Turnip Plaza case entails the abrupt dismissal of one of their employees, Mark Piper, by the hotel’s manager, Edward Griffin. The events surrounding the layoff attract both legal and ethical considerations to determine if they were legal and ethical. Mark had just been offered a lucrative offer by a rival company and thus was contemplating on leaving Turnip Plaza. However, Edward got wind of this offer and in turn promised Mark that if he stayed with Turnip Plaza, he would receive a promotion with a 50% salary increment and a guaranteed two-year contract. Mark relied on Edward’s promise and decided to stay with Turnip Plaza, but to his detriment.
Turnip Plaza case raises legal issues that can be explored using common law theories such as contract law and promissory estoppel that could attract compensatory damages and equitable damages. Irrespective of the legal outcome of the case, Turnip Plaza faces ethical obligations towards fulfilling the promise made by Edward upon examining the action using ethics tests and virtue ethics.
What legal theories might Mark use to try to legally enforce Edward’s promise? Explain the elements of these theories and how they apply to the facts of this scenario.
Mark Piper was a loyal and dedicated employee of the Turnip Plaza Hotel, until the manager, Edward Griffin decided to relieve him of his duties on claims of corporate restructuring. A month ago, Mark had been offered a lucrative deal by a rival company to Turnip Plaza, Huron Overnight Inn, where his salary would have substantially increased if he accepted to leave his current employer. Mark assured to revert back to the Manager of Huron Inn, Satcey Nguyen, with an answer to their offer within 48 hours.
Upon getting wind of this offer, Edward made a counter offer to Mark, with the intent of making Mark continue working for Turnip Plaza Hotel and turn down the offer from the rival company. Edward promised Mark that he would potentially receive a promotion that had a 50% raise of his current salary, and be guaranteed of a two-year term contract if he stayed with Turnip Plaza. To his detriment, Mark was fired shortly before he could receive his new contract. From the analysis of the happenings, Edward had already entered into a contract with Mark on behalf of Turnip Plaza. Thus, Mark could use the contract law theory to try and legally enforce Edward’s promise.
Contract Law Theory
Contract law theory provides the framework for the legal principles governing exchanges of services and goods of both entities and individuals (“Contract Formation and Execution,” 2020). Contract law is mainly concerned with how promises, which can be legally enforced, are made and executed.
According to Contract Formation and Execution (2020) article, a promise “is a declaration by a legal person (called the promisor) to perform or forbear from performing specified act(s). The recipient of the promise (called the promisee), upon a promise being made, has rights to expect (and often to demand) that the promise be performed.” A promise is enforceable in a court of law if there are legal remedies or has satisfied the legal conditions of a contract. Edward (the promisor) made a declaration to offer Mark a promotion with a 50% raise and an assured contract of two years. This promise, however, is only enforceable if there exist other legal remedies or has satisfied the must-haves of a valid contract.
Simply put, a contract can be defined as a promise to another and in addition to that, a specific demand of that person and that is legally enforceable (“Contract Law,” 2020). For any contract to be enforceable in a court of law, three conditions must be met, namely an offer, acceptance of the offer, and consideration (“Contract Law,” 2020). These three necessities of a contract provides for a case where the parties entering a contract have full and common understanding of the agreement terms.
Understanding the Word “Contract”
It is important to note that the word contract does not have to feature anywhere for a contract to become valid, nor does any party have to know they are entering into a promise that is legally enforceable (“Contract Law,” 2020). Having the full scope of what pertains the contract law theory, it is now imperative to examine how Mark can prove that Edward’s promise satisfied the three elements of a valid contract: an offer, acceptance of the offer, and consideration.
In defining a contract, a promise and a demand were the two components highlighted, which essentially constitute the first requirement to a valid contract, the offer (“Contract Law,” 2020; Markovits & Rauterberg, 2018). For any valid offer to a contract, three conditions need to be present.
Three Conditions Necessary for a Valid Contract
The first one is the presence of an offerer and offeree. The offerer is the person making the promise and a specific demand, whereas the offeree is the recipient of the offer (Markovits & Rauterberg, 2018). Edward made a promise to Mark that he would receive a promotion and a 50% raise in earnings in addition to a guaranteed two-year contract at Turnip Plaza. He also made a demand to that offer that this would happen in the case where Mark stayed at Turnip Plaza, which essentially meant turning down the offer made by Stacey, Huron Inn’s manager.
These three conditions make Edward the offerer and Mark the recipient of the offer and thus the offeree (“Contract Law,” 2020; Markovits & Rauterberg, 2018). The second condition is the intent to make an offer by the offerer, which is judged from the position of the offeree, that is, “If a reasonable person in the position of the offeree would believe the offerer’s words or actions constitute an offer, it is an offer” (“Contract Law,” 2020).
Marks Case in Reference to Contract Law
In Mark’s case, any reasonable person would have taken Edward’s promise an offer due to his influential position at Turnip Plaza. Thirdly, there must presence of definite terms of the offer such as to enable the offeree to understand and decide on accepting the offer. The terms of Edward’s offer were clear in that Mark understood what to expect upon accepting the offer.
Establishing a valid contract requires an acceptance to an offer, that is appropriate enough essentially implying an assent to the terms of the offer by the offeree in the manner required by the offerer (“Contract Law,” 2020; Markovits, 2019). Restatement of contracts proposes the mirror-image rule for offer acceptance, which implies that the acceptance of the offer by the offeree must be exactly in the terms dictated by the offerer in the original offer (“Contract Law,” 2020). Mark stayed with Turnip Plaza after turning down the offer from Stacey, which is exactly what Edward demanded of him in the offer. In addition, Mark did not propose a counter offer or try to change the terms of Edward’s offer.
The contract law requires that a good consideration supports the contract for it to be valid (“Contract Law,” 2020; Markovits, 2019). Consideration basically entails something of value, not necessarily in monetary or goods terms, that gives the other party an incentive to enter into the agreement establishing a contract (“Contract Law,” 2020).
Mark agreed to refrain from leaving Turnip Plaza for Huron Inn after being offered (in a month’s time) a promotion that had a raise of 50% and a guaranteed two-year contract. The refraining by Mark constitutes a consideration, which is the last requirement of forming a valid contract. Mark, therefore, could use the argument that Edward’s promise equates to a valid contract by arguing the presence of the three requirements necessary to establish a valid contract between any two parties as discussed above.
Within the contract law, Mark could also rely on the promissory estoppel exception to the consideration requirement in order to make the promise made by Edward a valid contract (“Contract Law,” 2020). As an equitable doctrine, the law relating to promissory estoppel states that if an offeree relies on an offerer’s promise to their detriment, the promissory estoppel doctrine may potentially make the promise a valid contract, even in cases where a definitive consideration is missing (“Contract Law,” 2020; Markovits & Rauterberg, 2018).
Mark did rely on Edward’s promise of getting a promotion that would see him realize a 50% salary increment along with a guaranteed two-year contract to turn down the lucrative offer made by Stacey. Thus, firing Mark before the commencement of the contract by Turnip Plaza puts him in a worse position than when he had the offer to join Huron Inn, after having relied on Edward’s promise. Mark can use this argument to show that he relied on Edward’s promise to his detriment, and that promise could now be enforceable by a court of law as a valid contract.
If Mark were to file a lawsuit and win what sort of damages or other remedies might he be entitled to?
If Mark files a lawsuit and wins, he will be entitled to compensatory damages and equitable remedies arguing from the principle of promissory estoppel. Essentially, award of remedies by a court of law occurs to a victim of a breach of contract (Markovits & Rauterberg, 2018). In broad terms, remedies are legal means through which enforcement of rights occurs or wrongs redressed (“Contract Remedies,” 2020). A remedy at law issued in terms of monetary amounts is referred to as damages.
Equitable remedies are awarded based on irreplaceableness of the subject matter of the case due to its uniqueness. Thus, winning the lawsuit means that Mark was a victim of a breach of contract by Edward, who acted on behalf of Turnip Plaza. A Breach of contract means that one party failed to abide by the material duties as per the agreement (“Breach of Contract,” 2020). Mark relied on a promise made by Edward to his detriment, even after all conditions satisfying a valid contract were present in the offer made by the latter, which necessitates him to seek remedy through the contract theory and promissory estoppel (“Contract Remedies,” 2020).
Mark is entitled to compensatory damages, which are damages awarded by a court of law to the plaintiff to make him better-off, the same way that s/he would have been had the contract been performed as per the agreement (“Breach of Contract,” 2020). Compensatory damages award the non-breaching party to a contract monetary gain that could have been realized in the period of the contract.
For Mark’s case, he would have seen a salary increment of 50% and a guaranteed contract for a two-year term. Thus, the compensatory damages need to equate to 150% of Mark’s salary before he was dismissed accrued for a period of two years. However, the dollar value of the compensatory damages will only be in the form of expectational damages since the calculation will be based on a two-year period as noted in the promise made by Edward.
In some cases, monetary award in terms of compensatory damages are not sufficient to fully put the victim of a breach of contract in the same position, had the contract not been breached. In such situations, the court may deem it fit to award the injured party equitable damages (Markovits & Rauterberg, 2018). Mark was a dedicated and hardworking employee and a highly sought professional tour guide due to his unmatched skills in extreme kayaking, hiking, and camping adventures.
Through his skills, Turnip Plaza was able to rake in significant revenue from the clients that sought Mark. This shows that Mark loved his job and had no intention of leaving. Firing him, against his will distances him from what he loves to do and it is only fair that Mark is hired back. Mark relied on Edward’s promise to his detriment and thus it would only be fair for a court of law to compel Turnip Plaza to reinstate him and honor their contractual obligations.
Does Turnip Plaza have an ethical obligation to fulfill the promise made by Edward to Mark? Is it right to lay off Mark under these circumstances? What should Turnip Plaza do from an ethical perspective?
Ethics concerns what is good and bad, and how people can apply good principles in their behavior (“Ethical Business Decision Making,” 2020). It is the consideration of how people develop norms and rules to act as guidelines in determining meaningful decision-making (“Business Ethics in a Nutshell,” 2020). However, resolving ethical issues, such as determining if a business has an obligation to fulfill a promise such as in the case of Turnip Plaza is not as simple as defining ethics.
In a business context, ethics concerns the behaviors occurring as a result of decisions being made simultaneously by various parties. Thus, to determine ethical considerations, a standard of behavior needs to be in place to help people determine is one party’s actions or decisions are ethical or unethical. That is, an employee needs to know what standard to use to determine if they are acting in an ethical manner (“Ethical Business Decision Making,” 2020).
There are several ethics tests that can be used to determine if Turnip Plaza has an ethical obligation to fulfill Edward’s promise to Mark, namely the front page test/viral news test, rights, justice or fairness, virtues, common good, and utilitarianism (“Ethical Business Decision Making,” 2020). The front page test looks at how a business can fair if the issue were to appear on a front page of a newspaper or go viral over the internet. If the news about firing Mark, one of the best tour guide in the industry, and the background story behind it was published or went viral, Turnip Plaza would for sure receive a backlash from people and possibly lose a lot of business as a result.
Under the rights and justice tests, businesses need to consider their duties to the affected employee in terms of their human rights and decide if treating them differently would be rational. Turnip Plaza has a duty of safeguarding Mark’s human rights by exercising honesty, care, respect, and candor. Mark valued his job and was highly sought after tour guide which has brought a lot of business for Turnip Plaza.
Just like their business, his job is his prized possession, and needs to be treated with respect and any decision pertaining his tenure needs careful consideration. In addition, justice implies looking at the alternative decision, which is fulfilling the promise made by Edward, and deciding if it is rational, which it is. Failing to honor the agreement made to Mark to his detriment and making him lose the offer extended to him by Huron Inn’s manager, Stacey, is not fair and just.
Virtues ethics test considers if an action upholds the virtues of honesty, fairness, and shows integrity (“Ethical Business Decision Making,” 2020). Edwards actions to fire Mark after denying him the opportunity for a promise promotion, pay raise, and a guaranteed contract for a two-year period is not in any way depicting honesty, fairness, and integrity on the part of the manager.
Lastly, common good and utilitarianism tests looks at how the action benefits everyone and if the overall good exceeds the any bad as a result of the action. Turnip Plaza might argue that it is a common good to fire Mark since adding a pay raise would affect their profitability and increase the financial risk of the company, which would hurt other employee as well. This argument can also be supported with utilitarianism where the action to fire Mark was for the greater good of saving the organization against various risks.
As most of the ethics tests indicate that Turnip Plaza has an ethical obligation to fulfill the promise made to Mark by Edward, it is not right to lay off Mark under the prevailing circumstances. That is, four out of six ethics tests support ethical obligation of the organization to the affected employee. In addition, applying virtue ethics offers an unbiased means of applying determining if a person or entity owes ethical obligation to another through the application of rationality, impartiality, reversibility, and consistency (Gardiner, 2018). It is rational to honor the promise made by Edward to Mark. Applying impartiality means being fair and just to all parties of the case. In this case, fairness and justice have not been served to Mark.
Reversibility in ethics pertains putting oneself in the other person’s state. Thus, if the manager or other senior executives of Turnip Plaza were in Mark’s state, they would not wish to be laid off after their manager dishonored the promise such as the one made by Edward. Lastly, consistency requires that moral actions be consistent. There is a high chance that the decision taken by Edward will not be applied in case a senior executive or himself is extended such a promise. Furthermore, Mark has worked for the organization for several years and has made a name as one of the best tour guides for extreme kayaking and adventure sports, something that has brought in significant revenue for the business.
From an ethical perspective, the following recommendations are necessary implementing. First, it would be in the best interest of the company to honor the promise made by Edward, which could show good faith and also save the organization against incurring significant losses in terms of legal fees and damages award if Mark chooses to file for a lawsuit and wins.
Secondly, Turnip Plaza should, reinstate Mark and honor the promise made by Edward in order to fulfill their ethical obligations. Thirdly, it would be best to formulate a formal framework through which all employees of the company examine their actions to determine if they are legal and ethical. In addition, critical decisions such as renegotiating employment or contract terms with employees need to be handled by a board of several senior representatives of the company so that any decision is made in respect of legal and ethical considerations.