Harry Smith owns several commercial buildings that he leases, one of which is a warehouse.
Smith requires that his tenants secure insurance policies to protect his ownership, but Smith must keep his buildings in good repair. Stan Ruppert is the owner of the warehouse. Stan tells warehouse manager to purchase insurance, but the manager fails to purchase such.
Smith contracts with Joe Powers to perform any necessary maintenance for the buildings.
Powers knows that the floor in the warehouse should be repaired, but he fails to so anything. One day a customer, James Howst, is walking to his storage in the warehouse when he falls through a rotten floor and fractures his ankle. Howst then files suit against Smith, arguing that he is an intended third party beneficiary of the lease provision requiring insurance and thus can sue Smith for failing to enforce the lease (which requires the warehouse to carry insurance). Using this information and information in the textbook, answer the following questions:
1. Can Smith delegate his duty to maintain the building to Powers? Why or why not?
2. Who can be held liable for Powers’ failure to fix the ceiling? Smith or Powers?
3. Was Howst an intended third party beneficiary of the lease between Smith and Ruppert? Why or why not?
4. Suppose that Smith tells Stan Moore, a local business owner to whom He owes $50,000, that he can collect the rents from the buildings’ tenants until the debt is satisfied. Is this a valid assignment? Why or why not?