[Solved] Ch. 12 Q7). Edward Johnson III, the CEO and principal own…

Ch. 12 Q7). Edward Johnson III, the CEO and principal owner of the world’s largest mutual fund company, Fidelity Investments, Inc., was a longtime tennis buddy of Richard Larson. In 1995, Johnson asked Larson, who had construction experience, to supervise the construction of a house on Long Pond, Mount Desert Island, Maine. Although they had no written contract, Larson agreed to take on the project for $ 6,700 per month plus lodging. At the end of the project in 1997, Johnson made a $ 175,000 cash payment to Larson, and he made arrangements for Larson to live rent- free on another Johnson property in the area called Pray’s Meadow in exchange for looking after Johnson’s extensive property interests in Maine. In the late summer of 1999, Johnson initiated a new project on the Long Pond property. Johnson had discussions with Larson about doing this project, but Larson asked to be paid his former rate, and Johnson balked because he had already hired a project manager. 

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