Randy, an Avid Hunter, Wishes to Build a Hunting Cabin

question 52

Essay

Randy, an avid hunter, wishes to build a hunting cabin for himself and his companion to use during hunting season. He travelled around the area and found a farm that had an ideal piece of land. Randy telephoned the farmer and asked to meet him over coffee. Bob, the farmer, decided to sell Randy the lot for $3,000. Randy agreed, handing Bob $500 in cash as a deposit. When Randy arrived for hunting season three months later, having erected a cabin in the summer, he offered Bob another $1 000 towards the purchase price. However, he found quite a surprise. Bob decided he no longer wishes to sell the land and informs Randy he will have to tear down his building. Bob tells Randy that he may do this because they did not have a written agreement.
Apply the four criteria of the "doctrine of part performance" to the circumstances and explain their relevance to both Randy's arguments and Bob's defence.

---

Definitions:

Excess Capacity

The situation in which a firm's actual production is less than its maximum possible production capacity.

Economic Profits

The surplus left after a firm has paid all its costs, including both explicit costs like wages and rent and implicit costs like the opportunity costs of capital.

Monopolistic Competitor

Refers to a market structure where many companies sell products that are similar but not identical, allowing them some power to set prices.

Profit

Profit is the financial gain realized when the amount earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.