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socrateaser
socrateaser, Attorney
Category: Business Law
Satisfied Customers: 33551
Experience:  Retired (mostly)
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These questions need to be answered in this format A. What

Customer Question

These questions need to be answered in this format:
A. What is the legal issue presented by these facts?
B. What is the applicable rule of law?
C. What is the likely outcome and why?

1. On February 2, Phillips induced Miller to purchase fifty shares of stock in XYZ Corporation for $10,000, representing that the actual book value of each share was $200. A certificate for fifty shares was delivered to Miller. On February 16, Miller discovered that the book value on February 2 was only $50 per share. Thereafter, Miller sues Phillips


2. Alan purchased shoes from Barbara on open account. Barbara sent Alan a bill for $10,000. Alan wrote back that 200 pairs of the shoes were defective and offered to pay $6,000. Barbara accepted the offer, and Alan sent his check for $6,000 in accordance with the agreement. Barbara cashed the check and one month later sued Alan for $4,000
Submitted: 3 years ago.
Category: Business Law
Expert:  socrateaser replied 3 years ago.
A1.

Issue: Intentional Misrepresentation/Fraud

Rule: Intentional Misrepresentation requires a material false representation of fact, intended to induce justifiable detrimental reliance and causing damages.

Analysis: Phillips is liable for intentional misrepresentation because he induces Miller to detrimentally rely on the false representation of the book value of XYZ Corporation. Miller's damages are $7,500, which is the difference between what he actually paid, and what he should have paid, had the correct book value of XYZ been correctly rerpesented.

Phillips could argue that MIller had a reasonable opportunity to conduct an investigation of the corporation before purchasing, and that this makes Miller's detrimenta reliance unjustified. However, in the face of an outright lie, Phillips' defense will fail, because of the clear scienter that Phillips displays to defraud in connection with MIller's purchase.

Therefore Phillips is liable for misrepresentation.

A2.

Issue: Accord and Satisfaction

Rule: Accord and Satisfaction requires that a contracting party accept, in extinction of an obligation, something different from or less than that to which the person agreeing to accept is entitled.

Analysis: Barbara and Alan have concluded an accord and satisfaction, because when Alan states that 200 of Barbara's shoes are defective, he places their agreement in dispute. Alan's offer for a lesser payment on the disputed merchandise is the accord, and Barbara's agreement to accept payment followed by the actual negotiation of Alan's tender of payment is the satisfaction.

Therefore, an acccord and satisfaction is concluded, and Barbara's subsequent lawsuit will be dismissed.

finis.

Edited by socrateaser on 10/6/2010 at 7:08 AM EST

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