Business Law: Small Claims Case Paper Example

Lee Shelton took over his father's building restoration business and the reputation he had built in the community around Davis, California. One day, Mr. Shelton got a call from a Mrs. Kim Hawkins from Waitsburg, Washington who had had the basement of her home destroyed by flooding. In the conversation that ensued, the two parties agreed verbally that Mr. Shelton would begin the basement restoration work on April 10th, 2012. Mr. Shelton was to travel from California to Washington on the 8th of the same month so that he could begin the work on the scheduled date. During the telephone conversation, the two also agreed that Mr. Shelton would offer the services of damaged component removal, flooring removal, structural framing evaluation, contamination and odor treatment, and the HVAC system removal. They also had a detailed discussion about what Shelton was to do and measurements of the basement were taken by Mr. Shelton.

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Further, the parties agreed that Mr. Shelton would buy carpeting for replacing the flooring that had been damaged by the flood. True to his word, Mr. Shelton purchased three gallons of Odorcide 210 Concentrate, Fresh Scent at a total cost of $95.26 and 600 sq. ft. basement (new) carpet valued at $2,400. On the 8th of April, he set out for the long journey to Mrs. Hawkins' home in Waitsburg using his truck. However, on April 9th, Mr. Shelton received a phone call from Mrs. Hawkins in which he was informed that she had canceled the job and no longer needed his services. Meanwhile, Mr. Shelton had driven for 772 miles to Waitsburg and booked his hotel upfront. Consequently, he lost a total of $4305.26 which covered the cost of purchasing the building materials, hotel and food expenses, travel gas, hotel expenses and daily wages. Hence, the legal issue which needs to be resolved is whether Mrs. Hawkins by late cancellation of the agreement with Mr. Shelton breached a contract, whether a contract came into being in the first place, and whether Mr. Shelton has a legal recourse in the small claims court. There is also the issue of which court between Californian and Washington courts has the jurisdiction to hear and determine this dispute.

Based on the circumstances and facts of this case, the state whose courts should have the jurisdiction over this verbal agreement is the state of Washington since this is essentially where the dispute arose and a claimant has suffered a loss. It was also from the state of Washington that the supposed contract between Mr. Shelton and Mrs. Hawkins was negotiated through over the phone and was to be performed. Furthermore, since the agreement between the parties did not have a governing law or choice of law provision, the small claims courts of Washington where the contract was set to be executed are the most appropriate to hear and determine this case. Choice of law or governing law means which state or jurisdiction's law will be applicable in deciding a legal dispute or which state's courts will have the competence to hear and decide the case (Stim n.p.). For substantive matters, courts usually apply the law of the state where the occurrence which gave rise to the litigation took place, the law of the state where the transaction took place or was concluded and negotiated, and the law of the state where the suit was filed (Stim n.p.). Therefore, in the present case, since the parties agreed that the contract was to be performed in Washington and the losses suffered by Mr. Shelton were sustained in that state, it is the state of Washington which should have jurisdiction over the verbal agreement.

Being a verbal agreement between Mrs. Hawkins and Mr. Shelton, the concrete evidence which Mr. Shelton should bring with him to the small claims court to establish a prima facie case is the evidence of the phone call conversation between him and Mrs. Hawkins. With this, he will be able to convince the court that there indeed existed a commitment between the parties and an agreement to have Mr. Shelton come over to Washington to repair Mrs. Hawkin's basement damaged by the flood. The evidence of the telephone conversation which Mr. Shelton can obtain from his service provider with a court order will also go to establish that it was unfair and unjust for Mrs. Hawkins to cancel the agreement at the last minute when Shelton had already spent a fortune. Based on the contractual doctrine of estoppel, she would be estopped from denying the existence of the agreement since Shelton relied on it to his detriment. Another piece of evidence which Mr. Shelton needs to bring to court is that of the costs he incurred in buying the materials as agreed with Mrs. Hawkins, his lost wages, the travel costs, the cost of purchasing gas for his truck, and his food and hotel expenses. This evidence will allow the court to determine how much damages Mrs. Hawkins should pay Mr. Shelton for breaching the verbal agreement. Also, he should present evidence of travel maps showing how long he had traveled when the agreement was canceled and the evidence of the estimates of materials or the ones he actually purchased and should be reimbursed for by Mrs. Hawkins.

As a matter of fact and law, Mr. Shelton needs to develop a contract to govern his future client agreements and avoid a scenario such as this involving Mrs. Hawkins whereby there is no written agreement in place upon which to base a legal action for breach. The main terms of a contractual agreement that should be included in a written contract include the cancellation or contract termination clause, choice of law or jurisdiction clause, arbitration clause, and waiver of liability clause. According to Kroeck, the contract cancellation clause needs to be included in establishing future client agreements since it avails to the parties various option through which they can end their contractual agreement to avoid one party making this decision unilaterally (n.p.). Further, the arbitration clause is important because it is a good choice for simple contract disputes as it is a more flexible, efficient, simpler, and faster way of resolving contractual disputes (Stim n.p.). Also, the waiver of liability clause should be included in an agreement between parties to a contract as it helps in freeing either party from any legal responsibility for breach resulting in losses or damages. Additionally, the choice of law provision needs to be included in a contract so as to specify the governing law that will be applicable in case a dispute arises out of the agreement, hence saving the parties the costs of shopping for an appropriate forum.

As a judge, in this case, the job commenced at the time when Mr. Shelton purchased some of the materials he would use on the agreed date as Mrs. Hawkins had asked him to. The reason for this is that during the telephone conversation, Mrs. Hawkins sent photos of the extent of damage on the basement to Mr. Shelton and even requested him to buy carpeting that would be used in replacing the damaged flooring. Reasonably, Mrs. Hawkins should have known that she would have to reimburse Mr. Shelton for the cost of purchasing these materials. Hence, Mrs. Hawkins owes Mr. Shelton the $4305.26 dollars lost in daily wages, travel food and material expenses since Mr. Shelton made all these expenditures under reasonable expectation that the agreement would stand up to the end and Mrs. Hawkins would meet her end of the bargain. Based on the evidence Mr. Shelton presented, my finding as a judge would be that Mrs. Hawkins breached the agreement with Mr. Shelton by canceling it very late when she knew -or ought reasonably to have known- that Mr. Shelton had already made preparations to start traveling and working on the project. I would thus find in the plaintiff's favor.

Conclusion

In conclusion, if Mr. Shelton approached me to help him with the management of his future dealings with clients such as those calling over the phone asking for his restoration service, I would instruct him to always ensure that the phone call conversation is recorded and that he arranges a meeting with such a client where a formal contractual agreement is drawn and signed by both parties. I would also advise Mr. Shelton to ensure that he asks his clients to pay deposits for his services to cushion him against late cancellations and act as a consideration. For, according to Beesley, the significance of exchanging something of value - known as consideration in contract law - is that it helps in differentiating a valid agreement from a mere gift or a one-sided statement which is difficult to enforce legally (n.p.).

Works Cited

Beesley, Caron. "Contract Law - How to Create a Legally Binding Contract." U.S. Small Business Administration, 23 Sept. 2016, www.sba.gov/blogs/contract-law-how-create-legally-binding-contract. Accessed 8 Oct. 2018

Kroeck, Louis. "Termination of Contract Clause." Azcentral, n.d., https://yourbusiness.azcentral.com/termination-contract-clause-12709.html. Accessed 8 Oct. 2018

Stim, Richard. "Arbitration Clauses in Contracts." NOLO, 2018, www.nolo.com/legal-encyclopedia/arbitration-clauses-contracts-32644.html. Accessed 8 Oct. 2018

- - -."Choice of Law Provisions in Contracts." NOLO, 2018, www.nolo.com/legal-encyclopedia/choice-of-law-provisions-contracts-33357.html. Accessed 8 Oct. 2018