Capstone Project: Disney World’s Jurassic Park Amusement Ride
Six months ago, you successfully received a Certificate in Purchasing and Supply Chain Disciplines. You had been in the supply chain field for several years and after receiving the certificate, you were hired by the Disney Company as a Purchasing Manager at their amusement park in Orlando, Florida,
After two months of orientations and doing some spot buys, sourcing some commodities and assisting on a small capital project, you were given a plum assignment. You were going to be the lead Purchasing Manager for the largest purchasing project in the history of Disney. The project was sourcing the new Jurassic Park ride. The ride will be loosely based upon the hit movie produced and directed by Steven Spielberg and made by Universal Studios across town. Comcast just bought Universal Studios. You will have two buyers (one experienced and one person with less than one year experience with a new bride). You had one very experienced purchasing administration.
It starts with sitting in a classroom that transforms into a vehicle that seats 50 people and moves 10 miles per hour. Every ten minutes a new class room fills up and moves out after watching a five minute 3-D movie especially made by Mr. Spielberg. The vehicle moves into a laboratory for growing dinosaur eggs containing robotic scientists, travels through a dense jungle with smells, animal sounds and an animatronics adult 30 foot moving T-Rex threatening the vehicles. The vehicle enters a pond and plunges 30 feet down a water falls into a raging river being chased by a flying dinosaur. The passengers are eventually rescued by the main characters from the movie and the US Marine Corp.
The project will cost $200 Million dollars. The construction and design cost is budgeted for $125 Million dollars. It will take two years to design, build and check out for operational effectiveness and safety. The park operates year round, operational up-time for the ride must be 95% of the time and safety is the number one priority. You will be using union and non-union workers during the project. The non-union workers represent $5 million in spend and half of that will go to a disabled sheltered workshop. The ride must start-up on May 30, 2013. It is now December 2, 2010 and ground breaking must occur on April 1, 2011. The start-up date is important because it ties into an ABC television special that will be broadcast around the world with all types of entertainment stars and the President of the United States will cut the red ribbon and take the first ride along with the entire Disney Board of Directors. ABC owns Disney.
Disney will be providing a scope of work and 50% of the proprietary technology will be provided by Disney and the other 50% will be provided by the supplier. Of the supplier’s technology, 30% will be provided by the supplier’s subcontractors. Equipment and materials will be sourced and shipped from across the entire world (especially England and Germany). The dinosaur exteriors will be manufactured in Australia from the makers of the studios that produced “Walking with the Dinosaurs” and then shipped to China where they will be painted and the electronics will be installed.
Warehousing will be must be sourced (leased or purchased) around Orlando to be used as staging and storage areas prior to shipping to the Orlando amusement park.
Scenario: You now learn from your boss that the Contracts
Administration Department where you work will have day to day responsibility for writing contracts
and making decisions of a legal nature related to the Jurassic Park project. This will help you “grow” according to I.M. Wright and it will save money for Disney. You will oversee the building of the new movie set, the hiring of several hundred temporary employees and negotiation of several real estate and procurement contracts
. Mr. Wright expresses confidence in you and says ominously that he ‘hopes you can handle it’ Disney Capstone Scenario----Contract Law
As the lead Purchasing Manager, you know that well written contracts
will protect Disney in case things go wrong or disputes arise. Such contracts
need to be negotiated in a thoughtful manner anticipating what can go wrong. You want to protect Disney and you also want to avoid angering your boss, Mr. I.M. Wright so you work hard to negotiate the right contract
You now encounter several situations involving contracts
that you helped negotiate:
1. A Disney sales representative named Harry Simpson has been terminated for poor sales performance. Human Resources also found his resume posted on an internet website. You learn that he is going to interview with Warner Brothers Movie Studios and they may hire him. Disney’s agreement with Simpson said in part, “Upon termination of your employment with Disney, you agree that you will not directly or indirectly compete with Disney as an agent, employee, broker or contractor for one year from the date of termination. This restriction applies to any employment opportunity in the United States.”
Simpson has a wife and three children. He argues the restriction should not apply as he has a right to earn a living and, after all, Disney terminated him. I.M. Wright asks you three questions:
A. Is the restriction likely to be found reasonable by a court of law
B. Does the agreement restrain trade?
C. What change if any would you make to the restrictive wording above for the future?
2. You are told that a collection agency named Ace Collections has threatened to file a mechanics lien against Disney’s Jurassic Park property based on a debt owed by a subcontractor named Pollack Excavating Inc. The debt is $5000. Upon investigation you learn that Pollack owed Jones Equipment this sum for equipment rentals and the debt seems valid. Ace is acting on behalf of Jones. Reluctantly you authorize payment of the debt because Pollack Excavating has gone bankrupt and you want to avoid the mechanics lien. After payment has been made you receive a letter from Jones Equipment demanding payment of the $5000 debt. When you protest that you have already paid Ace Collections, Jones tells you that they terminated Ace six months ago and Ace no longer represents them. What position can you take with Jones regarding this debt? Discuss how the law
of agency applies to these facts and who should win.
3. Disney (through a contract
you negotiated) had sublet some of the set design and fabrication work to Meehan Resources Inc. which advertised itself as a woman owned company that regularly donated 5% of its revenues to environmental causes. A Disney audit revealed that Meehan was not woman owned and had never donated to environmental causes. Disney terminated the contract
. Meehan calls you and refers you to a clause in the Agreement which reads: “Owner (Disney) has examined the contract
, knows all the requirements and is not relying upon any statement made by contractor in respect hereto.” He threatens to sue if you follow through with the termination.
A. Should you revoke the termination? Should you sue for fraud in the inducement?
B. Who is likely to prevail here between Disney and Meehan?
C. Meehan argues that there is a complete agreement here and parol evidence cannot be introduced. What is parol evidence and is Meehan right?
D. Meehan says Disney agreed in writing to not rely on any statement by Meehan so what is the basis for the termination?
4. As the Jurassic Park project staffs up, the need for laundry services increases too. I.M. Wright has tentatively negotiated a contract
with Island Laundry Inc. but he is worried as to whether they will do the job well. He asks you to add a clause to the contract
so that Disney may terminate the Agreement with 30 days written notice if it is not happy with the laundry’s performance. “I don’t want to get sued. Write so it’s our call as to their performance.”
A. Write a clause that accomplishes what Mr. Wright wants.
B. What type of condition is this called in a contract
5. The contract
with Island Laundry calls for them to clean and press 5000 shirts a month. After one week, Island has done 842 shirts but refuses to do any more unless they are paid more money. They want a renegotiation of the pricing. I.M. Wright asks you if Disney must wait until the end of the month to see if Island gets 5000 shirts done and if 30 days notice must be given to terminate them. Describe what actions Disney can take now and whether it must wait until the end of the month to conclude that Island Laundry has breached the contract
. Describe the legal doctrine applicable to these facts.
6. Disney has been buying up land to permit construction of Jurassic Park. However, one lot remains unpurchased. Your assistant, Paul Mankin, has told you that he has an oral agreement with the owner, Watson, for Disney to buy it for $100,000. Now Mankin comes into your office looking downcast. He has a letter from Watson that states, “Our agreement for me to sell my land plot to Disney for $100,000 was verbal. Therefore it is not binding on me and I will not do it.” You look at Mankin and sigh. Can Disney force the sale based on these facts? Describe what argument you would make to I.M. Wright about how to proceed.
7. Disney would like to contract
with Stephenson Inc. to build an office building for Disney to use near the park site. The building must be completed within six months or Disney will suffer extra costs of about $3000 a day. I.M. Wright would like for a clause to be put into the contract
incenting Stephenson to complete on time or before time. He thinks a liquidated damages clause may be appropriate. Write a memo to I.M. Wright describing why a $1000 a day liquidated damages clause could be enforceable, or, why such a clause should not be used if that is your view. In that case, suggest alternative ways to motivate Stephenson Inc. regarding the completion date.
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