Question

Assume Karen quit a job in New York that paid her $60,000 a year and that had additional employee benefits of 35 percent of salary to accept a new position in Los Angeles that allegedly would pay her $90,000 a year and have additional employee benefits of 45 percent of salary. Karen left New York, spent $10,000 in relocation expenses, and started working in Los Angeles. Karen planned to keep the job in Los Angeles for three years and then return to New York. After only two months in the new job, it became clear to Karen that the new job was nothing like it was purported to be. Her actual income was based on some hard to determine compensation model that appears to pay her about $4,000 per month, and the benefits seem to be more like 20 percent of pay. Karen is so sorry she took the new job and she is very upset with the Los Angeles based company that she believes grossly misrepresented the new job.

Assuming Karen can convince the court that she was intentionally mislead, under the benefit of the bargain approach discussed in Chapter 10, Karen's damages would be:

a. $391,500.
b. $218,700.
c. $228,700.
d. $80,200.
e. None of the answers above is correct.

Answer 1

If Karen can prove she was intentionally mislead by the Los Angeles based company, her damages would be calculated under the benefit of the bargain approach. Based on the promised salary and benefits compared to the actual salary and benefits she received, Karen's damages would be $82,900.

Step-by-step explanation:

If Karen can convince the court that she was intentionally misled by the Los Angeles based company, her damages would be calculated under the benefit of the bargain approach. This approach seeks to put the injured party in the same position they would have been in if the contract had been performed as promised. In this case, Karen would be entitled to recover the difference between the promised salary and benefits in Los Angeles and the actual salary and benefits she received.

Based on the information provided, Karen was promised a salary of $90,000 a year with additional employee benefits of 45% of salary. However, her actual income was about $4,000 per month and her benefits were more like 20% of pay. To calculate her damages, we need to determine the difference between what she was promised and what she actually received.

The promised salary was $90,000 a year, but the actual salary was $4,000 per month, which amounts to $48,000 per year. The difference is $90,000 - $48,000 = $42,000.

The promised benefits were 45% of salary, which would be $90,000 * 0.45 = $40,500. But the actual benefits were 20% of pay, which would be $48,000 * 0.20 = $9,600. The difference is $40,500 - $9,600 = $30,900.

Therefore, Karen's damages would be the sum of the salary difference and the benefits difference, which is $42,000 + $30,900 = $72,900. However, she also spent $10,000 in relocation expenses, which would be added to her damages.

So, Karen's total damages would be $72,900 + $10,000 = $82,900.