Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

Exercise 3

The Park Plaza Hotel awarded its valet and laundry concession to Larson for a three-year term. The contract contained the following provision: ''It is distinctly understood and agreed that the services to be rendered by Larson shall meet with the approval of the Park Plaza Hotel, which shall be the sole judge of the sufficiency and propriety of the services.'' After seven months, the hotel gave a month's notice to discontinue services based on the failure of the services to meet its approval. Larson brought an action against the hotel, alleging that its dissatisfaction was unreasonable. The hotel defended on the ground that subjective or personal satisfaction may be the sole justification for termination of the contract. Who is correct? Explain.