a. What are the arguments that Shaw is not liable on his promise?

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a. What are the arguments that Shaw is not liable on his promise?

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Stuart Studio, an art studio, prepared a new catalog for the National School of Heavy Equipment, a school run by Gilbert and Donald Shaw. When the artwork was virtually finished, Gilbert Shaw requested Stuart Studio to purchase and supervise the printing of twenty-five thousand catalogs. Shaw told the art studio that payment of the printing costs would be made within ten days after billing and that if the “National School would not pay the full total, he would stand good for the entire bill.” Shaw was chairman of the board of directors of the school, and he owned 100 percent of its voting stock and 49 percent of its nonvoting stock. The school became bankrupt, and Stuart Studio was unable to recover the sum from the school. Stuart Studio then brought an action against Shaw on the basis of his promise to pay the bill.
 
a. What are the arguments that Shaw is not liable on his promise?

b. What are the arguments that Shaw is liable on his promise?

c. Is Shaw obligated to pay the debt in question? Explain.

Explanation & AnswerSolution by a verified expert

a. What are the arguments that Shaw is not liable on his promise?

Explanation

It may be regarded as a promise of surety where the sponsor is committing to pay the dues. Person G is pledging to pay the dues of Company N since the company may be unable to repay its debts.
For the promise to be enforceable, it must be in writing.

Verified Answer

Person G may assert that the assurances made may be considered valid only if they are in writing since assurances are a promise of surety.

b. What are the arguments that Shaw is liable on his promise?

Explanation

Being the administrator of School H, Person G may have full voting rights of the school. So, the remunerative advantage gained from Company S’s performance may be the economic benefit of Person G, which makes Person G liable to pay.

Verified Answer

Here, Company S may affirm that since Person G is the chairperson of School H, the main purpose of the rule of exception to the Law of Frauds is going to be applied. Since Person G is going to gain economic benefit from the work of Company S, Person G is liable to pay.''

 
 
 

c. Is Shaw obligated to pay the debt in question? Explain.

Explanation

The satisfaction arising to a party purely by dignity of that person’s position as a stockholder, officer, or director of a corporation or business alone may not prove to be unique, expeditious, or serve economic advantage so as to solicit the main purpose law. Preferably, the court may scrutinize the promisor's position and ownership interest in the business to determine whether that person has enough control of the corporation to benefit directly. Here, Person G may have exerted enough power over the School N to exhibit the verbal guarantee to be mandatory.

Verified Answer

In this case, Person G may be accountable for the financial obligation. In order to be legally implementable, the law of frauds may require a pledge to answer for the duties of another, which may be in writing. The written account should state that the assurance is guaranteed, and it may emerge that the promisor's main objective is to satisfy the responsibility in order to secure a benefit or monetary advantage for self. Despite this, the commitment may be bona fide even though it may not have been a written document.

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