Court of Appeals of Arkansas 2011 Term Paper

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BUSINESS CASE STUDIES Business Case Studies: Holiday Inn Franchising, Inc. vs. Hotel Associates, Inc. Court of Appeals of Arkansas 2011 Ark. App. 147, 382 S.W.3d 6 (2011)PartiesHoliday Inn Hotel (the defendant) and Hotel Associates Inc. (HAI) (the plaintiff) (Case Text, n.a.).FactsBuddy House was a trustworthy constructor and had been in business with Holiday Inn for several years. The contracts were even not present in the written form as they both had good faith in each other. However, Holiday Inn once asked Buddy House to renovate a hotel. The total cost of renovation was estimated to be quite high by Buddy House, and he asked Holiday Inn to extend the franchise for ten years. Holiday Inn set a condition only if the renovated hotel ran well in the period. Buddy House started operating the hotel under the name of Hotel Associates Inc. (HAI), but Holiday Inn did not still grant them the extension. After a while, Holiday Inn licensed another local hotel without informing HAI. After ten years, again, HAI applied for an extension, and Holiday Inn asked for the renovation worth $3 million (Case Text, n.a.). The refusal of the extension remained the same from Holiday Inn’s side. HAI sold the hotel for $5 million and filed a case against Holiday Inn for fraud. Holiday Inn appealed in Arkansas court.ProcedureThe lower court decided in favor of HAI and charged Holiday Inn for the punitive damages, which was $12 million.

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However, the charges were requested to be lowered, so HAI demanded that they remain the same again.IssueThe central question…

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…seeming relation of trust. HAI and Holiday Inn had been working with each other for several years, which meant that HAI’s damages were purely financial and economic. There was no harm inflicted on anyone’s health or safety. The right to warrant the financial charges was rightful under the given circumstances.ConclusionFinancial misconduct, misreporting, or misrepresentation are all normally counted as fraud. However, suppose there is no legal binding of any contract or even for the franchising for Holiday Inn and HAI’s case. In that case, the relationship does count as the apparent binding of their relationship. The mutual benefits that both parties have been gaining with the element of ‘trust’ for economic growth and social wellbeing were distorted by Holiday Inn with informational asymmetries, causing direct harm to HAI’s informational and….....

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