Thomas borrowed $100,000 from First Bank, which asked that he both put up collateral
and provide a surety. Consequently Thomas provided the bank with a security interest
in his antique car collection and asked Victor to act as a surety. Victor agreed to do so
and signed a surety agreement with the bank. Thomas made several payments on the
loan and then asked First Bank for permission to sell three of his cars. First Bank
agreed, but it never notified Victor of the sale of the collateral. Thomas then defaults on
the loan. First Bank now wants Victor to pay the remainder of the loan. Must Victor
pay? Explain.
If the main purpose of the promisor (surety) is to obtain an economic benefit that he did
not previously enjoy, the promise is not within the statute of frauds.
If a raccoon gets loose from a cage and harms someone, the owner can escape liability
by showing that he took great care to keep the animal confined.
At its discretion, a court of equity may grant an injunction against breach of a
contractual duty when damages for a breach would be inadequate.
A modification of a preexisting contract occurs when the parties agree to change one or
more of its terms.
Fritz is seriously considering bankruptcy, because he has a large number of outstanding
debts, the principal ones of which are as follows: (1) he owes his ex-wife $25,000 in
back alimony and child support; (2) he owes $20,000 in guaranteed student loans; (3)
he has a lawsuit pending against him in which his ex-girlfriend is asking for $50,000 in
damages (the suit is based upon the intentional tort of battery and arises from an
incident in which Fritz got mad at his girlfriend and beat her up); and (4) he owes the
First Bank $20,000 for the loan securing his new sports car. Should Fritz file for
bankruptcy?
The business judgment rule would require an officer or director to use the highest duty
of care in the execution of his office.
Since the end of the nineteenth century, case law which developed from court opinions
has been the primary source of new law and ordered social change in the United States.
The doctrine of necessaries applies in the same way to minors and mental incompetents.