12 May DOES THE DOCTRINE OF SEVER ABILITY APPLY?
You are the city manager of a medium sized city which has
experienced an economic downturn in recent years. Your commercial tax base has
eroded, requiring you to either cut services or raise fees and taxes on the
residents. Unemployment is also growing as a result of fewer businesses located
within your city. You have been approached by a developer that would like to
build a business park on city land. The developer asks for property tax
reductions over the first five years of the project, and promises at least 500
new, permanent jobs as a result of the construction. The developer has also
asked for a no-bid acceptance, meaning that you must give her the land without
publicly seeking alternatives or other developers to counter her offer.
The project will provide a great deal of benefit to your
community, but a no-bid deal is contrary to efficient, open, and fair
government practice. The developer says that she will withdraw her offer if you
require an open bid process. What should you do?
Scenario 2: Illegal Contracts
Suppose CCP Management, Inc., entered into a property
management agreement with Andrew Hoganmuller and several companies which
Hoganmuller operated.
CCP now contends that Hoganmuller and the related companies
failed to pay amounts due to CCP as the manager of rental properties under the
property management agreement. The principal object of the agreement was the
performance of acts for which real estate broker and property management
licenses were required. CCP, however, did not at any time possess a real estate
broker license or a property management license. CCP contends it is entitled to
recover compensation for services for which no licenses were required regardless
of whether other services that it provided required such licenses.
Was this a legal contract? If it is an illegal contract, is
it void or voidable in whole or in part? Does the doctrine of sever ability
apply? Are there any additional facts that we would need to find out in order
to resolve this dispute?Ethical dilemma/Ilegal contractCase StudyPlease read the below scenarios and answer the questions.Scenario 1: Ethical DilemmaYou are the city manager of a medium sized city which has
experienced an economic downturn in recent years. Your commercial tax base has
eroded, requiring you to either cut services or raise fees and taxes on the
residents. Unemployment is also growing as a result of fewer businesses located
within your city. You have been approached by a developer that would like to
build a business park on city land. The developer asks for property tax
reductions over the first five years of the project, and promises at least 500
new, permanent jobs as a result of the construction. The developer has also
asked for a no-bid acceptance, meaning that you must give her the land without
publicly seeking alternatives or other developers to counter her offer.The project will provide a great deal of benefit to your
community, but a no-bid deal is contrary to efficient, open, and fair
government practice. The developer says that she will withdraw her offer if you
require an open bid process. What should you do?Scenario 2: Illegal ContractsSuppose CCP Management, Inc., entered into a property
management agreement with Andrew Hoganmuller and several companies which
Hoganmuller operated.CCP now contends that Hoganmuller and the related companies
failed to pay amounts due to CCP as the manager of rental properties under the
property management agreement. The principal object of the agreement was the
performance of acts for which real estate broker and property management
licenses were required. CCP, however, did not at any time possess a real estate
broker license or a property management license. CCP contends it is entitled to
recover compensation for services for which no licenses were required regardless
of whether other services that it provided required such licenses.Was this a legal contract? If it is an illegal contract, is
it void or voidable in whole or in part? Does the doctrine of severability
apply? Are there any additional facts that we would need to find out in order
to resolve this dispute?
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