You are the CEO of a Fortune 500 corporation. In the quest to increase productivity, you hire a consulting firm to help. The consulting firm is “Dr. Seuss’s Glikktastic Consultuatious Humpfers.” A young man by the name of Bartholomew Cubbins comes into your office. “I hear you have need of a new Zillow catcher or Whibbledyspout! You have hired a stuperdeously fabulostic consulting firm to help!” You and Mr. Cubbins agree to an arrangement where he will represent you with many different vendors and manufacturers, in an attempt to increase productivity. He will eliminate waste and use the connections he has throughout the world to get you the lowest cost with highest quality. You give him a budget and six month time frame to complete the work. He will not work on premises and you will not provide him with any company resources other than access to necessary systems and an ID card that says “Contractor” where most others say “Employee.”
At a luxurious dinner party, you introduce Mr. Cubbins to the host, Dr. Lorax. You introduce Mr. Cubbins as your new “Business Partner.” He begins to say, “But I am merely your stuperdeously fabulostic consu…” when you cut him off. You interrupt, “He is going to make this business take off, and we are so excited he is partnered with us!”
A few minutes later, Dr. Lorax and Mr. Cubbins are alone in the rumpus room. Dr. Lorax says, “Mr. Cubbins, it is so good that you have partnered with my friend. Let me tell you, I have been trying to get your partner to invest in this new idea for years, maybe you will be more receptive to it…” Mr. Cubbins is excited by the prospect and promises $500,000.00 of your company’s money to fund the venture.
On the way home from the party, Mr. Cubbins is very inebriated, and runs in to a truck transporting sulfuric acid. The truck is run off of the freeway into an art gallery of Theodore Geisel original art. The art is estimated at a value of at least $25 million. All of the art is melted in the acid. Mr. Cubbins is badly injured, but, as a good Samaritan, he stays at the scene. He meets the art gallery owner and says, “No worries, I was on official business! I was at a party with my boss, they will cover all the costs!” Then when the police arrive at the accident he proceeds to take off his top hat, scream “Zippity Zappity” and disappears, thus evading arrest.
Three months later, you are going over account statements and see the wire transfer of half a million dollars. You immediately call Mr. Cubbins into your office. He hobbles in on one leg, as he had to have one amputated after the accident. “WHAT DID YOU DO?!?! Dr. Lorax has been trying to get me to invest for years and have said “no” because it was stupid idea, besides, you had no right to promise that, I hired you for productivity enhancements! I am going to call Dr. Lorax RIGHT NOW!”
You grab the phone – Dr. Lorax immediately answers your call – “Hi! I am so glad you called, remember that investment you made… half a million?! Well…ohh, I can’t hold it in, we used it on the idea, and we made $10M! You invested half the capital, so I guess I owe you $5M…I’ll get my checkbook!”
Do you have a right to claim the profit? Why or why not? What actions would you take to ensure it is properly claimed? Is Mr. Cubbins entitled to workers compensation? How much? Why or why not? Will you be on the hook for the artwork that was destroyed? Why or why not?
Fact Pattern You are the CEO of a Fortune 500 corporation. In the quest to incr