ETH 321 Week 4 Contract, Tort and Employment Law Example

A Contract, a Fall and a Firing: Applying Business Law to Three Problems at a Craft Brewery

[Student Name]

University of Phoenix

ETH/321: Ethical and Legal Topics in Business

Week 4 Assignment

[Instructor Name]

[Date]

Blue Flint Brewing, its people, the incidents and all figures are composites written for a model paper; this is not legal advice.

Blue Flint, the invented Missouri brewer from earlier weeks, had a difficult year. It ended its Kansas distribution contract and faced a claim for $480,000. A customer slipped on a wet floor in its taproom and broke her wrist. And it fired a brewer two weeks after he filed a safety complaint with OSHA. This paper analyzes each problem using business law and recommends preventive steps.

Contract: The Distribution Agreement

Issue. Did Blue Flint breach its contract with Prairie Line Distributing by ending it?

Rule. A valid contract requires offer, acceptance, consideration, capacity and legality. A party that fails to perform as promised, without a legal excuse, commits a breach, and the other party may recover damages that put it where it would have been had the contract been performed (Mallor et al., 2019). Contracts may set their own termination terms, and some states add statutes that limit when suppliers may end distributor agreements.

Application. The written agreement meets all elements of a valid contract. It allows termination "for cause," defined to include failure to meet annual sales targets for two consecutive years after written notice. Blue Flint's records show Prairie Line missed targets in two consecutive years, and Blue Flint sent written notice after the first year. If the notice and targets meet the contract's terms, termination was not a breach. But Prairie Line argues the targets were unreasonable and that Blue Flint shorted it on popular products, which could excuse its performance. Kansas law on beer distributors may also require good cause and notice periods beyond the contract.

Conclusion. Blue Flint has a reasonable position under the contract, but the outcome depends on disputed facts and the state statute, which supports the settlement approach in Week 2.

Macaulay (1963) found in interviews with Wisconsin businesspeople that firms often relied on relationships and reputation rather than detailed contracts and formal remedies to manage exchanges, using contracts mainly when relationships broke down. Blue Flint's experience fits: the contract mattered only once the relationship failed.

Tort: The Taproom Fall

Issue. Is Blue Flint liable for the customer's injury?

Rule. Negligence requires a duty of care, breach of that duty, causation and damages. Businesses owe customers, as invitees, a duty to keep premises reasonably safe and to warn of hazards they know or should know about. Under respondeat superior, employers are liable for employees' negligence within the scope of employment. Missouri applies pure comparative fault, reducing damages by the plaintiff's share of fault.

Application. Blue Flint owed the customer a duty as an invitee. A bartender mopped near the restroom on a busy Friday without placing a warning sign, and the customer slipped minutes later. That likely breaches the duty, and the bartender's negligence within his job is attributed to Blue Flint. The fall caused a broken wrist, with medical bills of about $14,000 and lost wages. Blue Flint might argue the customer was partly at fault if she was distracted or the wet floor was obvious, which would reduce damages.

Conclusion. Blue Flint is likely liable, with damages possibly reduced for comparative fault. Its liability insurance should cover the claim.

A two-dollar warning sign was the difference between a mopped floor and a negligence claim.

Employment: The Brewer's Firing

Issue. Was firing the brewer lawful?

Rule. Missouri follows at-will employment: either party may end employment for any reason or none, but not for an unlawful reason. Exceptions include discrimination based on protected characteristics, retaliation for protected activity and public policy violations. The Occupational Safety and Health Act prohibits retaliation against employees who file safety complaints.

Application. The brewer reported a faulty pressure relief valve on a fermentation tank to his supervisor, then to OSHA when it was not fixed. Two weeks later he was fired; the stated reason was repeated lateness. His file shows two late arrivals in the prior year and no written warnings. The close timing and the thin record on lateness suggest the stated reason may be pretext. If so, the firing would be unlawful retaliation, and the brewer could seek reinstatement and back pay.

Conclusion. Blue Flint faces substantial risk on a retaliation claim. Autor et al. (2006) found that state wrongful-discharge doctrines, especially implied contract exceptions, were associated with modest reductions in employment, showing that such laws affect employer behavior, but the federal anti-retaliation rule applies everywhere and leaves Blue Flint little room here.

How the Three Problems Connect

The three problems look unrelated, but they share a cause: Blue Flint grew from a few friends brewing in a garage to a 40-person company without adding the routines that larger firms use to manage legal risk. No one tracked contract performance against terms. No written procedure governed cleaning in the taproom. No policy told supervisors how to handle a safety complaint. In each case, informal habits that worked when everyone knew everyone failed once the company grew. The owners' response should therefore be a set of simple routines rather than three separate fixes.

Costs of Getting It Wrong

Together, the three problems could cost Blue Flint well over $300,000 if they went badly: a settlement with the distributor, the customer's damages if insurance limits were exceeded and back pay plus legal fees in a retaliation case. That figure is several times the brewery's annual profit. By contrast, the preventive steps below cost a few thousand dollars and some management attention.

Preventive Steps

Contracts: track performance against contract terms, document notices and review state laws before ending any distributor agreement.

Premises: written cleaning procedures with warning signs, staff training and incident logs.

Employment: a written policy for receiving and fixing safety complaints, consistent documentation of performance problems and a review by an outside human resources adviser before any termination, especially after a complaint.

Conclusion

Applying contract, tort and employment law to Blue Flint's year shows how ordinary business decisions create legal exposure. The contract dispute turns on terms and a state statute; the taproom fall likely creates negligence liability; and the brewer's firing raises serious retaliation risk. Each could have been prevented or reduced with documentation, procedures and review before acting.

References

Autor, D. H., Donohue, J. J., III, & Schwab, S. J. (2006). The costs of wrongful-discharge laws. Review of Economics and Statistics, 88(2), 211-231. https://doi.org/10.1162/rest.88.2.211

Macaulay, S. (1963). Non-contractual relations in business: A preliminary study. American Sociological Review, 28(1), 55-67. https://doi.org/10.2307/2090458

Mallor, J. P., Barnes, A. J., Bowers, L. T., & Langvardt, A. W. (2019). Business law: The ethical, global, and e-commerce environment (17th ed.). McGraw-Hill Education.