Contract Law

Case Study #1

The case states that Sam's father signed the mortgage note with them as in Gladys and Sam. He made the monthly payments. Since he signed the mortgage note that makes him a co-signer and he is responsible for default payment. "Them" implies that Gladys and Sam signed this note as well. In my opinion Gladys is obligate to make payments since she signed the note and the creditor has all rights to go after her for payments. In this case, third-party beneficiary and/or novation do not apply. According to legal-dictionary.thefreedictionary.com (2012) novation involves the substitution of a new party while discharging one of the original parties to a contract by agreement of all three parties. A new contract is created with the same terms as the original one, but the parties are different. In this case, Shirley did not agree to the terms of the contract thus, Gladys is still liable. As for third party beneficiary, Shirley did not promise to pay the mortgage, thus the mortgage lender did not have a contract with her. According to legal-dictionary.thefreedictionary.com (2012) the terms of the contract bind one or both parties to render performance to the other in consideration of receiving, or having received, the other's performance. Contracts sometimes specify that the benefits accruing to one party will be conferred upon a third party. The effect of a third-party contract is to provide, to a party who has not assented to it, a legal right to enforce the contract. In this case, Gladys is still liable to make payments. When the contract was being signed Shirley was not in the picture, thus, she is not a third party beneficiary.

In addition, fsmlaw.org(2012) stated that Liabilities arising from a contract are not assignable without the consent of the creditor, and the mere assumption of the debt by a third party is not sufficient to establish a novation of the original contract unless there is a clear assent by the creditor to the substitution of a new obligor. Shirley isn't.

Case Study #2

Since Stanley and Garcia are both minors, Stanley didn't legally own the cards regardless if pay Garcia for it. Stanley can disaffirm his contract with American Collectors Company and the Company would have to return the cards. Also, Garcia can disaffirm the contract with Stanley and recover the cards. According to public.findlaw.com minors can make contract. The courts may choose not to enforce some of them. The law presumes that minors must be protected from their lack of maturity. Sometimes this results in minors receiving benefits (such as goods or services) and not having to pay for them, though they would have to return any goods still in their possession. In this case the cash that exchanged hands. However, a court may require a minor or the minor's parents to pay the fair market value (not necessarily the contract