This is a mandatory essay question. It is worth up to 20 points. Walter Wythe an
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Question
This is a mandatory essay question. It is worth up to 20 points. Walter Wythe and Jessie Pynkerton form Blue Powder Method, Inc. with each of them being a 50% shareholder. Blue Powder Method provides laboratory testing services. Two years after doing business together, the following text message exchange occurs between Jessie and Walt:
From Jessie (8/1/2016, 3:13pm): Walt, I want out. Give me $250,000 and I am gone.
From Walter (8/1/2016, 4:11pm): Sure. I will get you a check on the 7th. Meet at the lab at 3:00 p.m. Saul Gudmun will draw up the docs.
From Jessie (8/2/2016), 7:52am): Forget the check. Give $20,000 to Saul – I owe him for legal work. Give $12,000 to Mike E. I owe him after last night’s poker game. Wire the rest to my checking account. You have the info.
From Walt (8/3/2016, 1:11pm): Will do. Will you sign the docs?
From Jessie (8/3/2016), 4:09pm): Whatever.
At 2:00 p.m. on August 7, 2016, Walter wires $20,000 to Saul Gudmun, $12,000 to Mike E, and $218,000 to Jessie. Jessie does not show at the lab at 3:00 p.m. The following text message exchange occurs:
From Walter (8/7/2016, 3:13pm): Jessie. Where are u? We are at the lab. Money sent.
From Jessie (8/7/2016, 3:22m): Yeah. I got an alert from my bank. Thanks for the $$. Sorry. At hospital. Girlfriend nearly choked to death on vomit.
From Walter (8/7/2016), 3:24pm): Sorry to hear that. I hope she gets better. When will you be ready?
From Jessie (8/7/2016), 4:09pm): Later.
Five days later, Walter and Jessie meet at the lab. Walter presents Jessie with the agreements to document the stock transfer. Jessie, however, refuses to sign any of the documents. He says he wanted a severance to quit, not to sell his shares. Jessie argues that the $250,000 was his severance agreement offer. Jessie also refuses to return any of the money.
A lawsuit results. Walter argues that he bought out Jessie’s interest in Blue Powder Method. Jessie argues that he only agreed to a severance.
Was there a contract between Walter and Jessie? What were the terms of the contract? Is anyone in breach of any contract? How do you think a court will rule? Please explain your answers.
Explanation / Answer
There was a contract between Walter and Jessie because they both are 50% shareholder of the company. When Jessie asks Walter, give me $250000 on a text message is a clear indication of contract and Jessie is demanding a severance to quit. As per Jessie terms, severance contract is the amount she has demanded and Walter wanted the documents to be signed by her of exit from company. Walter has transferred the money as demanded by Jessie in the contract, but Jessie after receiving the money ignored Walter and do not turn back to Lab where they both have agreed to meet for signing the legal documents for leaving the company. Jessie breach the contract by not coming. Even after 5 days after when they both meet in the lab Jessie refuses to sign the document and also refuses to return the money. She excuse by saying that she only agreed to severance by mentioning the word ‘Whatever’ in the chat.
The chat contains clear messages on sending and receiving money but it is not clear on the acceptance from Jessie that she will sign the contract. Her acceptance is understood its own by Walter from the word whatever. In the court, Jessie will clearly say that she had not agrees on the point of signing documents. However, court will ask her that without any documents signing how can you take so much money from Walter. If any case you have taken, then you are obliged to return back to him. Otherwise, it is a crime.
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