Description

1. Assume you are responsible for approving commercial loans at a bank where you are a senior lending official. You are approached by two hospitality college graduates, each with three years management experience acquired after they completed their studies. They are seeking a loan slightly in excess of $1 million to establish a restaurant in the community. The funds will be used to lease land, facilities, and equipment as well as for renovation, inventory, salaries, and other start-up costs.

a. Will the organization structure selected by the partners have an impact on your decision to extend the loan?

b. What type of organizational structure would you want to see?

c. What other factors would influence your decision?

d. Would it make a difference to you if the partners were requesting the loan to complete a franchise agreement with an established and successful franchisor?

e. What information would you want to see from the franchise relationship to help you make your decision?

f. What information (franchise relationship) is required by law?

g. What additional information might you request if the partners were seeking the loan to operate as an independent restaurant?

h. Would it matter if the loan were for an existing restaurant, as opposed to a new start-up?

1. A-Plus Meetings International, a meeting planning company, has a good reputation. The owners of A-Plus always reserve meeting space with Hilton Hotel when they are able to do so. On the occasion in question, A-Plus reserved 20 rooms with Hilton Hotel for the Feb 14-18.

There was no written contract between A-Plus and Hilton Hotel. A-Plus paid the customary deposit, $500 to Hilton Hotel for the reservation. Unfortunately, on Feb 10, A-Plus had to cancel the reserved rooms. After canceling the rooms, A-Plus requested that the deposit be refunded. The representative claimed that the deposit was nonrefundable.

a. Is there a valid contract?

b. What are the elements of a valid contract and how are they established or not established?

c. Can you make a legal argument that Hilton Hotel should refund the deposit? If so, what is the basis of your argument? If not, what is the basis of your argument?

d. Is a verbal contract sufficient in this instance? Why or Why not? Can you think of any legal arguments that may or may not make the verbal contract enforceable?

e. Thinking as a manager, how might you handle this situation? Don’t just think in legal terms or simple conflict avoidance terms.

Sample Solution