To begin with, it is important to get all the facts in this situation straight. In this case, there are two contracts that Cooks entered into. The first contract was signed when Cooks was promoted from line cook to Sous Chef after working for Realfood Restaurant Group (RRG) for around three years. In this contract, Cooks agreed that she will not engage in any business that competes with RRG for ten years in case she is discharged from her duties. She was not supposed to run any such business as an employee, owner, or stockholder. The second contract came later after RRG decided to open a new concept restaurant named the Fast but Fancy Fried Emporium. Cooks agreed that she would design the menu for the new concept restaurant. In return, she was to be appointed the head chef of the restaurant and entitled to a salary. On top of this, she was to get a bonus of 3% of the profits that the restaurant would get in its first year or operation. The two contracts were agreed upon at different times and had different terms. They were also not bound to each other.
The first important detail to look at in this case is whether both parties were in appropriate capacities to lay down the terms of the contracts. Cooks is undoubtedly old enough to be able to enter into contracts with another party. Being able to work for three years and be promoted means that she was of sound mind and that RRG believed in her capability to serve the company. Part of the reason as to why RRG may have picked Cooks as the designated head of the new concept restaurant must have been because of her diligent services.
Delegate your assignment to our experts and they will do the rest.
Cooks can choose to sue RRG for Fraud. The consideration for Cooks in the second contract was that she was entitled to the 3% bonus payment upon the successful design of the menu to be used by the new RRG concept restaurant. RRG’s consideration was that they get the design that they will use for their new concept from Cooks. Furthermore, Cooks was entitled to be given the position of head of the new restaurant upon successful implementation of the new concept.
As seen in unit 4, according to the law, fraud occurs in several ways, one of which is when contracts that were signed to pay another party’s debt/default are not fulfilled. The second contract follows all statutes required for fraud writing. They are listed below:
Both parties are in contract. RRG and Cooks came to an agreement concerning the design of the menu and the implementation of the new concept restaurant.
The subject of the agreement is clear. In this case, the subject revolves around the new concept restaurant.
There is a consideration for both parties. The considerations have already been mentioned above.
Significant terms were laid in the contract. Cooks was entitled to 3% of the profits in the first year of the restaurant’s operation and a position as the head of the restaurant.
As seen before, the first and second contract are independent of each other. There is no mention of a clause that binds the two contracts. This means that the terms of the second contract still stand even if the terms of the first contract are breached. The interpretation of this is that Cooks is entitled to the terms in the second term even if she is terminated as the head chef of RRG. She still deserves the position of head of the new concept restaurant and the 3% pay. RRG took cooks ideas, downsized them, rebranded the concept restaurant, then implemented the new concept restaurant using the ideas presented to them by Cooks. In this situation, Cooks is entitled to make a contract claim against RRG for the use of her ideas. She should be compensated for the use of her ideas or be presented with the considerations that were laid down for her in the contract.
The other issue that comes to play is whether Cooks is bound to the non-compete agreement that she signed. This agreement was signed in the first contract. According to the terms laid out, Cooks was not to engage in any other business that seemed to compete with RRG in any capacity. The fact that Cooks went is running a business that is similar to what RRG is running may seem like a certain breach of contract. However, looking at the situation keenly reveals that Cook’s current business is not bound to the non-compete agreement that she signed. This conclusion is drawn after keenly analyzing the situation. At the time the contract was being signed, RRG had not started the new concept restaurant. The contract outlined that Cooks was to start or engage in any business that RRG was in for 10 years after her termination. Cooks herself is bound to this agreement for 10 years. She was terminated after some time. During the time of her termination, RRG was not involved in any business related to preparing food for health-conscious adults. As much as she had helped RRG to set up the new concept restaurant which had the same structure as her would be future business, RRG turned everything down. According to Cooks knowledge, RRG did not have the intention of implementing the new concept restaurant that she had helped design. This means that Cooks was free to start her current business as, at the time of her termination, it was not related to any of the business activities that RRG engaged in. It can, therefore, be concluded that Cooks is bound to her non-compete agreement as the contract defines the time limits clearly. However, her business does not breach the terms that were laid out in the contract at the time she signed it and also at the time of her termination.
Another controversy arises as to whether Cooks is entitled to the payment of profits from the new RRG restaurant. As at now, we are aware that the first and the second contract are unconditionally independent of each other. The payment of profits was outlined in the second contract. Her terms of termination were laid out in the first contract. This means that her entitlement to the profits is absolute regardless of whether or now she has been terminated.
From the analysis above, it is clear that Cooks has no fault. In fact, RRG was at fault for terminating Cooks for the failure of the new concept restaurant after the first trial. They even stole her ideas and used them to form a concept restaurant. Cooks can choose to sue RRG for wrongful termination and malice. From my perspective, Cooks knew that the first concept restaurant was not going to work and RRG was skeptical about it too. RRG knew that the new idea was valid and just needed a few twitches. The company chose to terminate Cooks’ first and second contract with them and then proceeded to implement the new concept together with the new twitches. This way, they would avoid the cost that came with making Cooks the head of the new concept restaurant. The second contract has not been adhered to ever since the new concept restaurant was implemented by RRG. According to unit 7, it is possible for Cooks to demand compensatory damages which is a legal remedy for breach of contracts. RRG breached the second contract by not paying the 3% that was agreed upon. Another way to look at this and to prove that Cooks terminated illegally was that she did not violate any of the terms of her contract. The considerations for the second contract did not mention that the company was to terminate Cook in case her new design menu for the concept restaurant failed the first time. There was no condition that was laid for Cooks’ termination in the second contract. This points to the fact that the company had no right to terminate her employment contract with them. Wrongful termination is a breach of not only the contract but also the law. Using this perspective, Cooks can sue RRG for wrongful termination and demand for compensation. However, there are several factors that Cooks will have to consider before pulling this move. These factors include:
The likelihood of success: She should evaluate whether or not she has higher chances of winning the case. In my opinion, there is over 90% chance that she will win it in case she decided to su+e RRG.
The desire to maintain a proper relationship with the potential defendant: In this situation, the potential defendant is RRG. Cooks will have to decide whether or not she wants to maintain a working relationship with her previous employer. In my opinion, I would advise her to proceed and file the lawsuit against RRG since the company terminated her on a wrongful basis and also has shown no interest in working with her in the future. The chances of the two finding a stable working relationship are arguably minimal.
The possibility of employing alternative dispute resolution in order to make the process faster and cheaper: There is no doubt that going to the court is more costly than alternative dispute resolution mechanisms especially to Cooks as she is individually suing RRG. She will have to endure lawyer costs. Furthermore, court processes are lengthy and may take up much of Cooks’ time. Since she certainly has the upper hand in most of these cases, she is in a good position to lay the rules and call the shots. Cooks could get a sit down with RRG and engage them in talks concerning how the company can compensate her without them having to go to court. She could ask them to withdraw the lawsuit that is currently in court. However, this path will demand Cooks to lower her compensation requests to a level that the company will see the compensation requests as fair.
The costs and time demanded by the litigation process: The compensation being asked for by Cooks has to be reasonably more than what she will use in the process. If Cooks proceeds with the litigation process, she will be tasked with hiring a good lawyer which comes at a cost. The longer the time the litigation process takes, the more effort Cooks will have to put in it and hence her business will not get her optimum attention. If the compensation she can possibly get is more than these factors, the Cooks can proceed to file the lawsuit against RRG.
Having confirmed that Cooks was wrongly terminated, she can also choose to sue RRG for punitive damages. As per unit seven, a party can file a lawsuit against another party on the basis of punitive damages which are damages that are aimed at punishing the defendant, in this case, RRG, in order to deter the company from engaging in the unethical behavior of wrongfully terminating its employees and proceeding to sue them (Zipursky, 2012) . Furthermore, the terms of the first contract seem rather harsh. The fact that an employee that is terminated from the company cannot be able to engage in any other business that is in the same market niche as that of RRG for 10 years is barbaric. A grace period of 2-4 years seems more reasonable. Furthermore, RRG has the audacity to go after its employees after terminating them on an unethical basis. This only worsens that situation and also gives Cooks a better shot at winning her cases by introducing another unethical misconduct perspective.
In a nutshell, Cooks is still bound to her non-compete agreement that she signed but her current business does not violate the terms of that contract. She is also entitled to making a contract claim against RRG who used her ideas to set up the new concept restaurant. Moreover, Cooks is entitled to the payments of profits form the new RRG restaurant. To strengthen her cases and increase her chances of winning, she can choose to file other lawsuits that have been discussed above against her previous employer.
References
Zipursky, B. C. (2012). Palsgraf, Punitive Damages, and Preemption. Harvard Law Review , 125 (7), 1757-1797.
