Case Scenario:
Scenario 1 – Property
Owen Monie obtained a loan from Home Banc to help pay for his tuition at Big University. Owen granted the bank a mortgage on his home as security for the loan and the mortgage was properly recorded. The loan agreement and mortgage were silent regarding Owen’s right to sell the house. During an inspection with his real estate agent, Owen discovered some of the piping in the house consisted of polybutylene, a type of plastic known for breaking. Three months prior to graduation, Owen sold the home to Cole Dusack. Since only a portion of the house contained the questionable piping and the cost to replace the entire system was estimated to be around $7,500, Owen did not disclose the presence of the polybutylene pipes. Cole did not expressly assume or agree to pay the loan Owen took out for his tuition and the bank did not expressly approve or disapprove of the sale, nor did it agree to release Owen from the liability of the loan. Seven months after the deal closed, a pipe broke causing over $10,000 in damages.
- Was Owen entitled to sell the home even though it was subject to a mortgage?
- Is Owen still liable for the loan?
- Is Cole obligated to pay the loan?
- What remedies does Cole have against Owen related to the sale of the house?
- Does Cole or Owen have a cause of action against any other party?
Scenario 2 – Price Discrimination
Evaluate whether violations of price discrimination laws occurred in the following situations.
- Scarpetto Brothers Meat Corporation sold beef, pork, and poultry products to stores and distributors. Scarpetto established quantity discount rates that were published publicly and provided to all buyers. The top rates provided the highest discounts to buyers purchasing more than 50 container loads in a calendar year. Only three buyers consisting of two national food chains and one large retailer purchased 50 or more containers; therefore, only three companies received the best discount.
- Jackson Tool Company is the largest manufacturer of power drills and their replacement parts. Jackson maintained two different lists of prices for its drills and parts. The green list contained parts that if purchased in quantities of ten or more were available for substantially less than the blue list.
- Clareal Cosmetics sold hair color and other related beauty preparations to beauty supply stores and beauty salons using a standard or fixed price schedule. Some of the stores and salons were provided with free demonstrators and advertising materials. The shops that were not supplied with the samples and advertising materials claimed that Clareal was engaging in unlawful price discrimination because all shops and salons were not provided with the same free materials.