JURI 530- PREDICTIVE OFFICE MEMO ASSIGNMENT HELP

JURI 530

 

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PREDICTIVE OFFICE MEMO ASSIGNMENT INSTRUCTIONS

OVERVIEW

Now that you have learned about the basic building blocks of contract law, and how court use
legal rules to reach legal conclusions about disputes, you are ready put your knowledge of these
rules and this process to practice. One set of legal rules you have learned about is the Statute of
Frauds, and this assignment will give you a chance to think, learn, write, and exercise judgment
about how the rules and policies that make up the Statute of Frauds doctrine might resolve a
dispute about two parties. Once you finish the assignment you will have a better understanding
of the Statute of Frauds and more experience performing legal analysis and writing.

INSTRUCTIONS


Instructions: Write a 35page, singlespaced, predictive memo in current Bluebook format
assessing the fact pattern below. Your memo must include 3 separate sections per question for
each of the 3 questions posed at the conclusion of the fact pattern. The purpose of the memo is to
predict how a court might apply the laws that determine whether a writing is required to enforce
a contract in this situation. As you write your memo, be sure to identify the legal rule or rules
upon which you base your prediction. For purposes of this memo, you may cite your textbook for
propositions of law (either a reference to a case, a Restatement (Second) of Contracts provision,
or a Uniform Commercial Code provision) that require citation, unless a more authoritative
proposition is referenced in the textbook for the same proposition of law. Also, be sure to discuss
all of the relevant facts and describe how the facts impact your prediction. Identify any
weaknesses or uncertainty in your prediction; anticipate and evaluate the merit of any opposing
arguments.


Fact Pattern: Business Capital Solutions, Inc. (“BCS”) is a small lending institution that
specializes in providing loans to small businesses. The loans are typically shortterm loans
designed to provide operating funds to small businesses in tight times, when they are short on the
cash needed to pay operating expenses and generate profits. These shortterm loans often take
the form of a “line of credit.” The line of credit has a limit, but the borrower is allowed to borrow
on the line of credit, as needed, up to a determined maximum loan amount. The line of credit
often has a very short term, so that the entire loan has to be repaid no later than the end of the
term, which might be, for example, 1 year from the date BCS extends the line of credit to the
borrower.

On January 3, one of BCS’s commercial lending officers, Marie Klokov, meets with Louis Price,
the president of a small construction company. Price’s company, HardHat, LLC (“HardHat”),
generally pays out its annual profits as bonuses to key employees, and it also makes equipment
purchases at the end of year; consequently, in the first few months of every year HardHat has
very little cash in its bank account, and needs extra cash to pay employees and buy materials and
supplies to perform contracts during the first months of the new year. Price talks to Klokov about
getting a line of credit from BCS for the new year. Klokov and Price discuss a $250,000 line of
credit. The two propose that the entire balance would have to be repaid on or before December
31. Price says, “That should be no problem. In fact, I think we’ll have anything we borrow repaid
by June, when we’ll get paid on a couple of big projects we are working on.” At the meeting,

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Price provides a loan application, together with copies of HardHat’s annual financial statements
and tax returns from the past 3 years.

After reviewing the application and supporting documents, Klokov tells Price that she expects
that the Loan Committee, which is responsible for the final decision on whether to make the loan
or not, will probably have some concerns about loaning that much to HardHat, which does not
own any real estate or have any other valuable assets that could serve as security for the loan.
Klokov says, to Price, “Would you be willing to personally guarantee the loan’s repayment?”
Price says, “Absolutely, I would be willing to agree to guarantee that HardHat will repay the
loan. If the company can’t pay it, I’ll do it. However, if BCS will loan the money to HardHat
without a personal guarantee, I’d prefer that.” Klokov agrees that she’ll submit the loan
application to the Loan Committee without any guarantee, and if the Committee rejects the
application, she will resubmit it with Price’s promise to guarantee the loan.

The next day, Klokov submits the loan application and documentation to the Loan Committee.
The committee, as Klokov anticipated, has grave concerns about lending so much money to
HardHat, which leases, rather than owns, most of its equipment and has no other assets it can use
as security for repayment of the loan. The committee rejects the application. Klokov resubmits
the application, together with a personal financial statement dated January 3. The personal
financial statement includes Price’s name and address and a list of all of Price’s personal assets
and liabilities. At the end of the list is a statement: “The undersigned certifies that this Personal
Financial Statement includes a complete, honest, and accurate statement of all of my personal
assets and liabilities.” A signature line follows that statement, and Price’s signature is on the
signature line. Klokov tells the committee that Price is willing to personally guarantee repayment
of the loan. The committee grants the application.

Klokov calls Price to give him the good news. Price says, “Great. When can I get some money?”
Klokov tells him that he just needs to stop by the BCS office. “I’ll need a representative of
HardHat to sign the loan agreement, and I’ll need you to sign the personal guaranty. Once they
are both signed, I can get you a check for whatever amount you’d like to borrow on the line of
credit.” Price stops by the BCS office the same day. He signs the loan agreement “as president of
HardHat, LLC.” The separate Personal Guaranty Agreement is ready for him to sign, but Price
does not sign it, and the representative of BCS who was holding the loan documents fails to
require that he sign it. Price leaves the office with a copy of the signed loan agreement, the
unsigned personal guaranty, and a check drawn on the line of credit in the amount of $40,000.

BCS does not realize that the personal guaranty has not been signed until Klokov happens to
review the file 1 month later. She then contacts Price and leaves several messages asking him to
sign the personal guaranty, but Price refuses to take her calls and does not return her messages.

In your predictive memo, please address 3 questions:

1. Is the Personal Guaranty Agreement between BCS and Price an agreement that falls
within any of the categories of the Statute of Frauds? Fully explain your answer.

2. For this part only, assume that the Personal Guaranty Agreement is an agreement that is
within the Statute of Frauds. Is the writing requirement satisfied by any of the written
documents referenced in the hypothetical?

3. For this part only, assume that the Personal Guaranty Agreement is within the Statute of
Frauds, and that none of the written documents referred to in the hypothetical satisfy the