Contract Case Study of Faulty Boiler

Introduction

 Knarles and Barkley are a father and son team who own and operate a facilities company. Knarles is the father and Barkley is the 17-year-old son. Their company is based in Maryland and does business in Maryland, Virginia, and the District of Columbia. Their services include building maintenance for residential and commercial properties.

 On staff they have a licensed plumber, which they are responsible for renewing their license per the plumbers’ contract with their company. Knarles delegated this responsibility to his son Barkley, and Barkley did not renew the license. This contract was agreed to four years ago, and was good for a period of two years. Knarles and Barkley still rely on this plumber to perform duties for the company.

 Knarles went to Hawaii for a trade show, leaving his son Barkley in charge of the company. While Knarles is away at the trade show, Ian Chetum reaches out to Barkley to obtain services. Barkley sent him a standard agreement to which Chetum agreed with and signed. Upon signing this agreement, Chetum requests a service to be done on his property, his property has no heat and it is February.

 Barkley sends their plumber and another employee to Chetum’s property. Upon inspection, the plumber notices the boiler in use has been recalled due to the fact it does not allow for the proper ventilation of carbon monoxide that the boiler builds up. The boiler was purchased at a salvage yard by Chetum, and he did not have it installed correctly. The plumber recommends a new boiler be purchased and installed.

 Chetum does not want to purchase a new boiler and instead tells Barkley to fix the boiler. The plumber told Barkley he can get it to work, but a new boiler should be installed instead of fixing the old one. Barkley disagrees and demands the plumber does as the client wants. The plumber fixes the old boiler. When Knarles returned from his trade show trip he finds out that tenants in Chetum’s property were taken to the hospital with carbon monoxide poisoning. Barkely tells his father about the contract between their company and Chetum. Barkely was unaware of Chetum’s reputation for being a ‘crook’. One person who works in the same industry as Knarles told him Chetum stole his idea for renovating old HVAC systems. Knarles tried to cancel the contract and return the deposit made by Chetum, minus the cost of the work already done. Chetum then sues Knarles and Barkely for breach of contract.

Examination of Legal Issues

 This case study occurs in two jurisdictions. The contract itself was based in Maryland. Therefore, Maryland would have jurisdiction over it. Chetum’s property is located in Virginia. Virginia would have jurisdiction over the faulty boiler, the tenants becoming ill, the plumber working without a license, and the landlord/tenant laws that were broken.

 Barkley is only 17 years old, which makes him a minor in all 50 states of the United States. “In all 50 states and the District of Columbia, the contract rights of youth under the age of 18 are restricted and/or infancy is a defense to the enforcement of a simple contract” (Donald Roper, Superindendent, Potosi Correctional Center (Petitioner), v. Christopher Simmins (Respondent), 2016). Barkley is a resident of Maryland. Maryland Commercial Law Code §§3-305 recognizes infancy as a defense. Legally speaking, anyone under the age of 18 is considered an infant.

 According to the Maryland Commercial Law Code §§3-305, “A defense of the obligor based on (i) infancy of the obligor to the extent it is a defense to a simple contract, (ii) duress, lack of legal capacity, or illegality of the transaction which, under other law, nullifies the obligation of the obligor, (iii) fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to learn of its character or its essential terms, or (iv) discharge of the obligor in insolvency proceedings” (Find Law, 2019). In this example, the person who contractually obligated to provide something to another person is an obligor. The person who is contractually obligated to receive something from the obligor is referred to as an obligee. Barkley is the obligor, as he is providing services for Chetum. Chetum is the obligee as he is receiving the services.

 Chetum is in violation of the Virginia Landlord/Tenant Law §55.1-1220. The first violation is in regards to “Comply with the requirements of applicable building and housing codes materially affecting health and safety” (LIS Virginia Law, 2019). Once Chetum was informed the boiler in question had been recalled due to a safety issue, he was legally obligated to ensure the boiler did not pose a risk to his tenants. The law goes on to state that Chetum was responsible to “Make all repairs and do whatever is necessary to put and keep the premises in a fit and habitable condition” (LIS Virginia Law, 2019). Chetum was concerned that there was no heat in his building in February in Virginia, which can get very cold. However, he was informed that repairing the boiler was not going to be sufficient, from a safety standpoint. He was legally obligated to do whatever was necessary to ensure the premise was fit and habitable, which meant replacing the recalled boiler. Finally, Chetum was in violation of the following portion of the law, “Maintain in good and safe working order and condition all electrical, plumbing, sanitary, heating, ventilating, air-conditioning, and other facilities and appliances, including elevators, supplied or required to be supplied by him” (LIS Virginia Law, 2019). The heating was not in good or safe working order, nor was the ventilation, which ended up causing several of his tenants to be taken to the hospital due to carbon monoxide poisoning.

 In addition, Chetum was also in violation of the Virginia Landlord/Tenant Law §55.1-1239. This law states that one can be guilty of “wrongful failure to supply an essential service” (LIS Virginia Law, 2019). Chetum attempted to address the heating issue, but his desire to cut corners and save money resulted in a denial of essential service. The service needed was essential because heat must be provided to tenants, as well as, they must be kept from harm due to faulty equipment that is not their responsibility.

 According to the Virginia Comparative Negligence Code of Virginia Title 8.01: Section 34, Chetum, as well as, Knarles and Barkley, could be prosecuted for Negligence that caused injury to a person(s). The contract that Chetum entered into with Barkley may null and void because Barkley is a minor, but that does not bar the company from the actions they undertook that resulted in harm to others. Chetum refused to purchase a new boiler and wanted the current one fixed. Barkley, who knew the boiler was recalled for a safety issue, chose to act as Chetum desired, and not push for a replacement boiler. Both decisions resulted in tenants being poisoned by carbon monoxide. Barkley could have also refused to comply with Chetum’s request and instead contacted the Housing Authority to ensure that proper steps were taken to keep the tenants safe. In the very least, if Barkley did not know who to call, he could have called the non-emergency number for the local police or his father, to find out the best course of action he could take.

 Knarles and Barkely, if they are members of the International Facility Management Association, were in breach of their ethical requirements. “IFMA members will comply with all civil and criminal laws that may apply to them” (IFMA, 2014). Criminally speaking, one would ask if Barkley could foresee that his actions would result in the poisoning of the tenants in Chetum’s building. Barkley was informed by his plumber that the boiler in question had been recalled due to the fact it was not properly ventilating carbon monoxide.  Repairing the cause of its inoperable status would not change the fact that it was recalled, therefore, it is reasonable to assume that Barkley could foresee that people would get sick from fixing the boiler. This action could result in the Board of Governors of IFMA to expel them from the association due to the ethical breach. Being expelled from an organization such as IFMA could cause a loss of business and networking opportunity for Knarles and Barkley. Ethical breaches are not always something that can be prosecuted, but they are serious offenses in terms of reputation.

 The plumber for Knarles and Barkley was working unlicensed due to the fact that Barkley had not renewed his professional license. His contract was negotiated four years ago and was only good for two years. Therefore, it was the plumbers’ duty to either request a new contract or to renew his licensure himself. However, at the time of the work on Chetum’s building the plumber was not licensed.  According to the Attorney General of the State of Virginia, there is a zero tolerance for unlicensed professionals practicing their trades. The Attorney General instituted a Consumer Protection Act to protect individuals from unlicensed tradesmen. The plumber in this case study was “Undertaking work without a valid Virginia contractor’s license when a license is required” (Herring, 2018). This could result in the plumber facing stiff financial penalties for his actions. In addition, Knarles and Barkley could also face fines for not only employing a person who is unlicensed but also for allowing him to perform duties that should only be delegated to licensed professionals.

 The individual who claims that Chetum stole his design for utilizing old HVAC systems and turning them into new ones would have a claim, if he had filed copyright papers, or can prove in a court of law that he did in fact create the method and that Chetum stole the design. If Chetum did steal the design, and the implementation of that design is what caused the tenants to become ill, the man who made the claim of the stolen design is not at fault. If the design was stolen, Chetum can be sued for intellectual property theft. Designs have to be proven safe before they are permitted to be utilized; therefore the man who is claiming the design was stolen is not at fault for Chetum utilizing the design, if that is in fact the case.

Conclusion

 It was unwise for Knarles to leave his seventeen year-old son in charge of the company while he attended a trade show. The fact that Barkley allowed an employee’s licensing to lapse should have been proof for Knarles that he was not capable of running the business in his absence. Knarles wants Barkley to learn how the business operates, but due to his age, he still needs an adult to ensure that everything is being done correctly. For example, the plumber’s license not being renewed may have been due to an oversight on Barkley’s part, but the plumber himself should have known his license was not renewed and he should have taken action to rectify his licensing. In addition, Knarles is the adult owner of the company which means it was up to him to ensure that his employees’ contracts are all up to date and that their required licensing is current and in good standing with the state.

 Chetum does not have grounds to sue for breach of contract because he entered into a contract with a minor. The minor was representing a business, which legally he had no right to do. If he was learning how to enter into contracts, it was Knarles responsibility to sign the contracts as the adult. Knarles offered to refund Chetum’s deposit minus the fees for the work already done by the employees. The work done by the employees and the decision made by Chetum caused many tenants to become ill due to carbon monoxide poisoning. Knarles’ company can still face lawsuits and possible criminal suits due to their involvement in the situation.

 The tenants have the best grounds, from a legal perspective. Chetum broke several landlord/tenant laws. Many people became ill, which means he is liable for any medical bills, lost wages, and pain/suffering his actions caused. The contract Barkley entered into with Chetum is legally void because he is a minor. However, his employees still acted on his direction and fixed something that should have been replaced. This means that Barkley and the employees present that day are also liable for lawsuits, as well as, criminal investigation.

 The plumber and/or Barkley should have refused to fix the boiler citing safety issues. The housing authority should have been notified that Chetum was using a recalled boiler that was putting tenants at risk. Barkley believed that following the orders of the client was what was best for business, but he did look out for the tenants of the building. When working in an arena that directly affects the general public, or a group of individuals, a company has to ensure that their actions do not pose a risk of harm to those innocent people.

 Barkley may be considered, legally speaking, an infant with regards to entering into a contract. However, he could be prosecuted as an adult for allowing the defective boiler to remain in use once he knew the boiler was not only recalled, it was recalled due to an issue that can kill people. Knarles is not facing any legal issues for leaving his son in charge of the company, but it appears as though there is enough legal issues occurring due to the results of that decision, that Knarles will not leave a child in charge of his company again.

References

• Donald Roper, Superindendent, Potosi Correctional Center (Petitioner), v. Christopher Simmins (Respondent), 03-633 (The Supreme Court of the United States January 2016).
• Find Law. (2019). Maryland Code, Commercial Law § 3-305. Retrieved from Find Law: https://codes.findlaw.com/md/commercial-law/md-code-com-law-sect-3-305.html
• Herring, M. R. (2018, May 11). Virginia.gov. Retrieved from Attorney General Mark R. Herring Consumer Protection: https://www.oag.state.va.us/consumer-protection/index.php/news/284-may-11-2018-attorney-general-herring-announces-enforcement-actions-against-unlicensed-contractors
• IFMA. (2014, September 16). International Facility Management Association. Retrieved from Code of Ethics: https://www.ifma.org/about/governance/code-of-ethics
• LIS Virginia Law. (2019, October 9). Code of Virginia. Retrieved from Virginia Residential Landlord and Tenent Act: https://law.lis.virginia.gov/vacodepopularnames/virginia-residential-landlord-and-tenant-act/