Schuster, D/b/a/ Diversity Heating and Plumbing, 688 N.E.2d 1172, 1997 Ill. Lexis 482 (Supreme Court of

HANNAH ALDRIDGE
4/10/20
WEEK 11 HOMEWORK
Question 14.1
14.1 Sole Proprietorship
James Schuster was a sole proprietor doing business as (d.b.a.) “Diversity Heating and Plumbing” (Diversity
Heating). Diversity Heating was in the business of selling, installing, and servicing heating and plumbing
systems. George Vernon and others (Vernon) owned a building that needed a new boiler. Vernon hired
Diversity Heating to install a new boiler in the building. Diversity Heating installed the boiler and gave a
warranty that the boiler would not crack for 10 years. Four years later, James Schuster died. On that date,
James’s son, Jerry Schuster, inherited his father’s business and thereafter ran the business as a sole
proprietorship under the d.b.a. “Diversity Heating and Plumbing.” One year later, the boiler installed in
Vernon’s building broke and could not be repaired. Vernon demanded that Jerry Schuster honor the warranty
and replace the boiler. When Jerry Schuster refused to do so, Vernon had the boiler replaced at a cost of
$8,203 and sued Jerry Schuster to recover this amount for breach of warranty. Jerry Schuster argued that he
was a sole proprietor and as such he was not liable for the business obligations his father had incurred while
operating his own sole proprietorship. Is Jerry Schuster liable for the warranty made by his father? Vernon v.
Schuster, d/b/a/ Diversity Heating and Plumbing, 688 N.E.2d 1172, 1997 Ill. Lexis 482 (Supreme Court of
Illinois)
Since common of ownership is lacking when one sole proprietor succeeds another. The individual who does
business as the sole proprietor under one or several names remains one person, personally liable for all their
actions. No matter how many identities the original owner creates, he is still liable of doing business of said
object. Jerry Schuster, as a sole proprietor, was not liable for the warranty previously made by his father who
was a sole proprietor. Because generally no continuity of existence, the death of a sole proprietor, the sole
proprietorship ends.
Question 15.1
15.1 Liability of a Franchisor
McDonald’s Corporation (McDonald’s) is a franchisor that licenses franchisees to operate fast-food
restaurants and to use McDonald’s trademarks and service marks. One such franchise, which was located in
Oak Forest, Illinois, was owned and operated by McDonald’s Restaurants of Illinois, the franchisee.
Recognizing the threat of armed robbery at its franchises, especially in the time period immediately after
closing, McDonald’s established a corporate division to deal with security problems at franchises. McDonald’s
prepared a manual for restaurant security operations and required its franchisees to adhere to these
procedures.
A McDonald’s regional security manager visited the Oak Forest franchise to inform the manager of security
procedures. He specifically mentioned these rules: (1) No one should throw garbage out the backdoor after
dark, and (2) trash and grease were to be taken out the side glass door at least one hour prior to closing.
During his inspection, the security manager noted that the locks had to be changed at the restaurant and an
alarm system needed to be installed for the backdoor. The McDonald’s security manager never followed up
to determine whether these security measures had been taken.
HANNAH ALDRIDGE
4/10/20
WEEK 11 HOMEWORK
One month later, a 6-woman crew, all teenagers, was working to clean up and close the Oak Forest
restaurant. Laura Martin, Therese Dudek, and Maureen Kincaid were members of that crew. A person later
identified as Peter Logan appeared at the back of the restaurant with a gun. He ordered the crew to open the
safe and get him the money and then ordered them into the refrigerator. In the course of moving the crew
into the refrigerator, Logan shot and killed Martin and assaulted Dudek and Kincaid. Dudek and Kincaid
suffered severe emotional distress from the assault.
Evidence showed that Logan had entered the restaurant through the backdoor. Trial testimony proved that
the work crew used the backdoor exclusively, both before and after dark, and emptied garbage and grease
through the backdoor all day and all night. In addition, there was evidence that the latch on the backdoor did
not work properly. Evidence also showed that the crew had not been instructed about the use of the
backdoor after dark, the crew had never received copies of the McDonald’s security manual, and the required
warning about not using the backdoor after dark had not been posted at the restaurant.
Martin’s parents and Dudek and Kincaid sued McDonald’s to recover damages for negligence. Is McDonald’s
liable for negligence? Martin v. McDonald’s Corporation, 572 N.E.2d 1073, 1991 Ill. App. Lexis 715 (Court of
Appeals of Illinois)
McDonald’s is liable for negligence for having a responsibility to ensure the well-being and employees and
the functions/tasks of the company. The reginal manager lacked duty for checking the security measures. He
reported that the back door was not working properly but did not follow up on taking care of the issue. Thus,
the company is neglecting the care and protection of employees and customers. McDonald’s was gaining
revenue throughout that time period and should have fulfilled all the duties of a licensor that includes the
safety and protection of the workers.

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