For the purposes of determining holder in due course status, the requirement of value is
similar to consideration.
The creditor first must proceed against the debtor before suing the surety.
When the privity rule is applied, a bank lending money to the client of an accountant
cannot sue the accountant for malpractice.
A young stockbroker was rather overwhelmed by a flood of new clients. Assunta, one
of his clients, had purchased XYZ Corp. stock through the broker at a price of $35 per
share. The price had gone down to $29 by the time Assunta telephoned the broker.
Assunta told the broker that she wanted to sell the stock if it went below $30 and
inquired as to the price. The broker did not check the price, but thinking it could not
have fallen below the $30 threshold, simply reassured Assunta that it was still “in the
low 30s.”
Marta, Assunta’s cousin, also had purchased XYZ stock at $35 per share and made a
similar call to the broker and received the same response. Marta, however,
coincidentally saw the price on a stock ticker tape when she hung up and realized the
broker had made an error. Both Assunta and Marta held the stock and did not sell.
Later that same day, the stock price fell an additional $7 per share. Facing sizable
losses, both Assunta and Martha decided to sue for fraud when Marta told Assunta of
the broker’s misstatement. Discuss the probable outcome of the lawsuits.
Action taken by shareholders without holding a meeting is valid under the RMBCA if it
is evidenced by a written consent signed by all the shareholders entitled to vote on the
action.
John received a promotion at work and felt new clothes would be necessary in the new
position. John went to a local store and charged three ties on his charge account at a
cost of $60 each. Bill, a friend of John’s, saw a sidewalk vendor selling ties at a cost of
three for $10 and bought three at that price. The friends compared purchases that night
and found that they had purchased identical ties. John became enraged and said that he
would not pay the charge-account bill because the ties were clearly not worth $60 each.
Bill indicated that he would testify on John’s behalf if litigation ensued. What would be
the probable outcome of the lawsuit?
If a buyer purchases goods on approval, the buyer’s creditors cannot reach such goods
until there is an approval.
An agent’s liability as a party to a contract with a third person is affected little by the
degree of disclosure of the principal.
Confirmation of an extended time payment plan releases a debtor from liability for all
debts that would be discharged by an ordinary bankruptcy discharge.
An option contract is a binding promise to keep an offer open for a stated period of time
or until a specified date.
A forged endorsement must be reported to the bank within one year of the time that the
bank statement is received.
If an exculpatory clause or limitation of liability clause limits liability for damages
caused only by negligent conduct, liability is neither excluded nor limited if the conduct
alleged is found to be grossly negligent, willful, or wanton.
The government may require licenses to be able to deal in certain goods, and these
licenses may be revoked for improper conduct or violations of statutes and regulations.
A signed letter from an employer setting forth details of an oral contract of employment
satisfies the statute of frauds.
It generally is incorrect to use the phrase “illegal contract” because, if an agreement is
illegal, the courts do not recognize it as a contract and the agreement is void.
Forbearance may constitute consideration.
If a contract calls for both rendering services and supplying materials to be used in
performing the services, the contract is classified according to its dominant element.
A family law court is an example of a specialty court.