Legal Studies

Donna Brown owned a flower shop, which she was anxious to sell. Charles Blue visited her shop and discussed a possible purchase. During those discussions, Donna stated that she was sure 2013 sales would exceed $400 000 and that sales for 2012 were more than $360 000. Charles was impressed with those figures and offered to purchase the flower shop for $110 000 cash. The sale was completed one week later (November 24, 2012) and was documented with a brief written agreement that did not include anything about past sales. In April 2013, Charles had the 2012 financial statement for the flower shop prepared and discovered that actual sales for 1997 were $320 000. In addition, Charles knew that 2013 sales were 5 percent below sales for the same period a year earlier. Charles confronted Donna with those figures and Donna was evasive and refused to accept any responsibility, saying only that the written agreement contained no mention of sales figures. Charles asks you the following questions:

Q1.  What are the legal issues involved in this case?
Q2.  Does Charles have a right to sue Donna, and if so, what is the legal basis for his action? What must he prove? Cite any relevant cases.  
Q3.  Evaluate the arguments of both sides (Brown and Blue). What do you think the court’s decision will be and why?
Q4.  What are some lessons business professionals can learn from this case?