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Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts
Edition 11ISBN: 978-1133587576Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts
Edition 11ISBN: 978-1133587576 Exercise 7
Who Should Bear the Loss?
FACTS Stratton Corporation, a regional pharmaceutical company located in Smithville, has embarked on a policy that encourages its employees to become computer literate. Accordingly, it has made a deal with BMI, a computer manufacturer, to have computers available for purchase by Stratton's employees at considerable savings from the standard retail price. The computers, which Stratton purchases in bulk, are delivered to the home office in Smithville.
The state in which Smithville is located imposes a 7 percent sales tax on any sale that takes place in the state. For state tax purposes, the place of sale is the point of delivery. To help reduce the costs to its employees, Stratton has arranged for its personnel to pick up their purchased computers at its Somerton office, located about twenty-five miles from Smithville in a neighboring state that does not impose a sales tax.
Arthur Johnson, a Stratton employee, took advantage of the offer and purchased a computer through Stratton on December 1. The computer arrived in Smithville on December 18, and was immediately placed on a Stratton pickup truck for transfer to Somerton. Johnson, however, wanting the computer home by Christmas, suggested that he put the unit in his car and deliver it to Somerton himself, where he would immediately pick it up. Stratton, seeing a chance to save time and money, agreed to the suggestion.
On December 19, in a heavy snowfall, Johnson left Smithville with the computer bound for Somerton. As he turned onto the highway, the snowfall became a whiteout. Hearing on his car radio that blizzard conditions had already made the roads into Somerton impassable, Johnson brought the computer to his home, planning to hold it there until he could deliver it to Somerton. On the night of December 21, when snow still blocked the Somerton roads, the Johnson home and many of its furnishings were destroyed by fire. Unfortunately, Johnson had no fire insurance at the time. The computer was among the items that were destroyed. Stratton refused to accept the loss on the computer and demanded that Johnson pay for it in full. Johnson refuses.
Social, Policy, and Ethical Considerations
Do cost savings ever give a business the right to violate a social or ethical responsibility?
FACTS Stratton Corporation, a regional pharmaceutical company located in Smithville, has embarked on a policy that encourages its employees to become computer literate. Accordingly, it has made a deal with BMI, a computer manufacturer, to have computers available for purchase by Stratton's employees at considerable savings from the standard retail price. The computers, which Stratton purchases in bulk, are delivered to the home office in Smithville.
The state in which Smithville is located imposes a 7 percent sales tax on any sale that takes place in the state. For state tax purposes, the place of sale is the point of delivery. To help reduce the costs to its employees, Stratton has arranged for its personnel to pick up their purchased computers at its Somerton office, located about twenty-five miles from Smithville in a neighboring state that does not impose a sales tax.
Arthur Johnson, a Stratton employee, took advantage of the offer and purchased a computer through Stratton on December 1. The computer arrived in Smithville on December 18, and was immediately placed on a Stratton pickup truck for transfer to Somerton. Johnson, however, wanting the computer home by Christmas, suggested that he put the unit in his car and deliver it to Somerton himself, where he would immediately pick it up. Stratton, seeing a chance to save time and money, agreed to the suggestion.
On December 19, in a heavy snowfall, Johnson left Smithville with the computer bound for Somerton. As he turned onto the highway, the snowfall became a whiteout. Hearing on his car radio that blizzard conditions had already made the roads into Somerton impassable, Johnson brought the computer to his home, planning to hold it there until he could deliver it to Somerton. On the night of December 21, when snow still blocked the Somerton roads, the Johnson home and many of its furnishings were destroyed by fire. Unfortunately, Johnson had no fire insurance at the time. The computer was among the items that were destroyed. Stratton refused to accept the loss on the computer and demanded that Johnson pay for it in full. Johnson refuses.
Social, Policy, and Ethical Considerations
Do cost savings ever give a business the right to violate a social or ethical responsibility?
Explanation
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Case summary:
Employees of SC company w...
Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts
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