LEGL210 Davenport University Case of the Returned Drill Bit Paper

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LEGL 210 – Homework 4 (Instructor: W. Randall) Read the following fact scenario. Identify the possible court actions (e.g. breach of contract, assault, etc.), why each court action applies, the chance of success of each action, what damages the plaintiff might recover, and the defendant’s possible defences, if any. Most of the issues are related to contracts and torts; do not consider the applicability, if any, of Workers’ Compensation Board coverage. What follows are the guidelines for your submission: • Write only your student number; do not write your name. • Format the homework in accordance with the Course Outline. • Staple the pages together; do not paper clip them; plan ahead to find a stapler. • Do not submit the assignment in a plastic folder or binder. • Include a cover page that sets out the assignment name and your student number. A cogent and response will have at least 500 words and, possibly, hundreds more. On July 2, Edmonton Oil Ltd. (“EO”) ordered three identical Model 100 drill bits from Alberta Drill Bit Inc. (“ADB”). Drill bits are cutting tools used to remove material to create holes, such as oil wells. EO’s written order form described the items ordered by model number. EO agreed to pay $25,000 to ADB for each Model 100 drill bit. On July 5, ADB sent EO its own form confirming the order. ADB’s form repeated all of the items on EO’s form, but added the following clause in bold and italic print, “EO must make any complaints concerning defects in, or nonconformity of, the goods delivered within a reasonable period after delivery.” On July 12, ADB delivered the Model 100 drill bits to EO’s place of business. EO immediately removed its old drill bits and placed two of the new drill bits into operation on wells being drilled in Alberta. EO stored the third new drill bit in its original, unopened crate. On July 19 at 11:00 AM, Page 1 of 3 LEGL 210 – Homework 4 (Instructor: W. Randall) EO’s Vice President for Operations, Vanessa, notified ADB’s Sales Manager, Sally, that EO wanted to return the third drill bit. Sally asked why EO wanted to return the drill bit, and Vanessa responded, “EO does not need a third drill bit given the lack of pipeline capacity from Alberta.” Sally replied that all sales were final and that EO was obligated to pay for all three drill bits. Vanessa said that EO did not want the third drill bit and expected ADB to pick it up immediately. Sally responded that she would have a truck pick up the third drill bit on July 19 at 4:30 PM, but Sally expected EO to pay for each of the three drill bits. At 12:30 PM on July 19, Sally left the ADB’s office to pick up lunch on an unpaid break; Sally had not scheduled the pick up of the third drill bit from EO. After leaving the ADB property, Sally texted Mildred, her mother, on her iPhone while walking on a sidewalk owned by the City of Edmonton and that was adjacent to vacant lot owned by the City of Edmonton. Sally did not see a large pothole in the sidewalk, and she fell down. Sally broke her ankle, hit her head, and passed out. The pothole was so deep that no one saw Sally fall into the pothole. It took 45 minutes for a City of Edmonton employee to discover Sally, and an additional 15 minutes for an ambulance to arrive. On July 20, Vanessa was furious that ADB did not retrieve the third drill bit by the close of business on July 19. Thus, Vanessa ordered Edgar, an EO employee, to drive the drill bit to the offices of ADB and leave it on the front lawn. Vanessa told Edgar that she did not care how the bit was returned to ADB. Following Vanessa’s instructions, Edgar drove to ADB, rolled the drill bit off the truck, and drove away. ADB saw that the bit was scratched, but decided to sell it without any repair. ADB sold the third drill bit to Incision Drilling Co. (“Incision”) on July 27 for $22,000 — a discount of $3,000. It Page 2 of 3 LEGL 210 – Homework 4 (Instructor: W. Randall) cost ADB $18,000 to build the Model 100 drill bit. Incision is one of the largest drilling companies in North America and regularly purchases multiple Model 100 drill bits from ADB. ADB maintains a large inventory of the Model 100 drill bits. Incision used the bit returned by EO, but found that the scratched bit damaged other equipment. The damages amounted to $10,000. Incision wants to get money for that damage. As of August 1, EO has not yet paid for any of the three Model 100 drill bit despite repeated demands by ADB. ADB has not paid any money to Incisions. As of August 1, Sally is recovering at the Glenrose Rehabilitation Centre following her release from the Neurological Critical Care Unit at the University of Alberta Hospital. Given the delay in getting medical attention, Sally’s brain injury became worse than it otherwise would have been. Sally’s care team does not think she will ever be able to return to work requiring skills similar to her job at ADB. Page 3 of 3 …
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