Craigs Crocodiles, Inc. Income Statement For The Year Ended 31st Jan. 2009

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Craig’s Crocodiles, Inc. Income Statement For The Year Ended 31st Jan. 2009

2009

Operating Activities $

Revenue (Sales)300,000

Credit Sales 160,000

Net Sales 460,000

Purchase (300,000)

Gross Income 160,000

Expenses

Warehouse hire24,000

Office space12,000

Bad debts60,000

Shipping cost25,000(121,000)

NIBT 39,000

Workings

Bad Debts and Collection Expenses = 0.2 x 300,000

= 60,000

The Lease Contract between Craig’s Crocodiles, Inc. and Pauly Property Management Services

Opening

The two parties entered into an agreement over lease of warehouse and office spaces. The three year contract was signed by both parties in January 2008. Since Craig’s Crocodiles, Inc. did not have enough resources to construct their own properties (offices and warehouses) for the crocodiles, the company opted to outsource these services from Pauly Property Management Services. In the process, a contract was signed, an indication agreement. However, having realized significant growth and development in their investments, Craig’s Crocodiles, Inc. opted to have bigger space with the capacity to accommodate their growing numbers. Craig’s Crocodiles, Inc. now feels that it is time to move to relatively bigger and spacious rooms.

Findings

From the above case, it can be established that the two parties has entered into a contractual agreement over a specified period of time, 3 years in this case. This constitutes a contract, then, it represents a deliberate, voluntary, and legally bidding contractual agreement between these two competent parties. Whether written or implied, this lease contract is part of the common law that holds the parties to it and must be honored. This contractual relationship between Craig’s and Pauly Property is evidenced by the offer, acceptance of this lease offer, and the valid (valuable and legal) consideration. Therefore, both Pauly Property Management Services and Craig’s Crocodiles, Inc. acquire the duties and rights to each other. Though the existence of this contractual-relationship should not apply that it is not avoidable, not void, or not enforceable, all the parties to the lease contract are legal protected.

Since this is a lease contract, the contractual arrangement therefore calls for the user (lessee) to honor his part of the agreement by paying the property owner (lessor) the agreed monetary compensation for the use of the asset (warehouse and office spaces in this case). Given that the warehouse is a tangible property, this lease contract is therefore referred to as rental agreement as the user agrees to rent the warehouse rented out by Pauly Property Management Services. Since this is a periodic lease, the Craig’s Crocodile is under no obligation to honor the contractual agreement for the specified lease period (3 years).

Closing

Any attempt to terminate the lease contract before the 3 years period elapse is contrary to the contractual agreement and constitute a breach of the lease contract between the parties. Craig’s Crocodile intention to pre-maturely terminate the contract without the consent of the lessor (Pauly Property Management Services) attracts legal actions that include compensation for the damage caused. Therefore, Pauly Property Management Services is justified and legal correct to demand a financial compensation for the lost lease rent for the remaining two years of the contract. In addition to the lost rent, Pauly Property Management Services will suffer other damages that attract compensation of a fair financial value.

Pauly Property Management Services should also sue and be awarded for punitive damages (exemplary damages) that the breach of lease contract has caused them. Punitive damage is often awarded to the injured party as compensation to the plaintiff for the damages and losses suffered as a result of the harm that Craig’s Crocodiles, Inc. has caused the lessor. This penalty is also aimed at punishing Craig’s Crocodiles, Inc. (the defendant) for their outrageous misconduct, hence deterring the defendant from any similar misbehavior done intentionally, like in the case of Craig’s Crocodiles, Inc by disregarding the contractual interests and rights of Pauly Property Management (the plaintiff). This punitive damage is the “quasi-criminal” because it stands halfway between civil and criminal law. Therefore, the $300,000 punitive damage fine is justified and legally backed.