36.3 Use the IRAC Method to breifly identify the Issue, the Legal Rule (Legal Te

Question

36.3 Use the IRAC Method to breifly identify the Issue, the Legal Rule (Legal Test), the Facts Applied to the Test (Analysis), and the Conclusion/ Holding of the case.

Case 36.3 Holiday Inn Franchising, Inc. v. Hotel Associates, Inc Court of Appeals of Arkansas, 2011 Ark.App. 147, 382 s.w.3d 6 (2011). Background and Facts Buddy House was in the construction business in Arkansas and T decades, he collaborated on projects with Holiday Inn Franchising, Inc. Their relationship was acterized by good faith-many projects were undertaken without written contracts. At Holkday request, House inspected a hotel in Wichita Falls, Texas, to estimate the cost of getting i in Holiday Inn wanted House to renovate the hotel and operate it as a Holiday Inn. House es recovering the cost of renovation would take him more than ten years, so he asked for a fran term longer than Holiday Inn's usual ten years. Holiday Inn refused, but said that if the hote otel run "appropriately," the term would be extended at the end of ten years. House bought the renovated it, and operated it as Hotel Associates, Inc. (HAI), generating substantial proffts.e offers to sell it for as much as $15 million. estimated thx ou hise

Explanation / Answer

Issue - Buddy House renovated the Holiday Inn's property and agreed to run for ten years as HAI on a condition that on appropriate running of the hotel, the contract will be extended beyond ten years, because he could have recovered the costs incurred in the renovation in more than ten years only. When HAI applied for renewal of licence, it was granted to some other hotel chain because a Holiday Inn executive received a kickback from it.

Rule - The court had to determine if the Holiday inn owed a duty to the plaintiff which it did not perform and if it engaged in fraudulent behavior.

Application - Given the kind of relationship buddy house enjoyed with Holiday Inn, the later owed a duty to apprise him of the internal business plan, that made him confident of the renewal of licence. The Holiday Inn failed to discharge that duty to the plaintiff and fraudulently transferred the title to the other party.

Conclusion - The Hloiday Inn did not disclose the information knowingly to the Plaintiff who assumed that everything was as usual, not suspecting the change of plan. This non disclosure amount to actionable fraud when the parties enjoyed a relationship of trust and confidence and a condition of inequality of knowledge makes one party vulnerable.

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