BUSINESS LAW
BUSINESS LAW
17th Edition
ISBN: 9780357007594
Author: Mann
Publisher: Cengage Learning
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Chapter 13, Problem 8Q
Summary Introduction

Given situation:

This case is relating to the concept of unconscionable contracts. The court can refuse to enforce a contract that is unconscionable, or unreasonable, or any portion it considers unconscionable.

To discuss: Whether person B is bound to his obligation.

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David M. Fox was a distributor of tools manufactured and sold by Matco Tools Corporation (Matco). Cox purchased tools from Matco, using a credit line that he repaid as the tools were sold. The credit line was secured by Cox’s Matco tool inventory. In order to expedite payment on Cox’s line of credit, Matco decided to authorize Cox to deposit any customer checks that were made payable to “Matco Tools” or “Matco” into Cox’s own account. Matco’s controller sent Cox’s bank, Pontiac State Bank (Pontiac), a letter stating that Cox was authorized to make such deposits. Several years later, some Matco tools were stolen from Cox’s inventory. The Travelers Indemnity Company (Travelers), which insured Cox against such a loss, sent Cox a settlement check in the amount of $24,960. The check was made payable to “David M. Cox and Matco Tool Co.” Cox indorsed the check and deposited it in his account at Pontiac. Pon-tiac forwarded the check through the banking system for payment by the drawee bank.…
Henry entered into a contract with Classic Motors to purchase a specific vehicle. The contract provided for a purchase price of $30,000.00 with a down payment of $10,000.00 and the balance of $20,000.00 on terms. Classic Motors was to repair the broken windshield and install a new CD player. Henry was to be notified once the work was completed so he could come and pick up the car. Classic Motors cashed the cheque and prepared the car as promised. Shortly before contacting Henry the car was stolen from the lot. Henry has demanded the return of his $10,000.00 down payment. What is the legal position of the parties?
Miguel, a 16-year old mechanic’s apprentice, borrowed $3,000 from his next door neighbour, Jono, by telling him that he was 20 years old and had a good, stable income. The loan was payable in three equal fortnightly payments. After the first payment, Miguel stopped paying Jono. Jono wanted to bring a legal action against Miguel but when he discovered his real age, he decided instead to initiate an action in tort for deceit against the latter. Will Jono likely be successful in his action in tort for deceit against Miguel? Explain please.
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