Week 4 - David part - info

Week 4 - David part - info - (CASE) At the end of the...

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(CASE) At the end of the summer, Jeremy Atwater earned enough money to put a down payment on a car. He decides to continue working part-time during school to earn money for the car payments. Jeremy purchased a car from Smooth Sales Used Cars. Smooth did not ask Jeremy how old he was; the salesman assumed he reached the age of majority. Jeremy paid the down payment and signed a contract stating that he would make payments of $200 each month. Six months later, Jeremy lost his job and could no longer make the payments. Jeremy took the car to Smooth and said he wanted to cancel the contract, and that he wanted his money back. What are the possible outcomes? Compare and contrast potential legal and equitable remedies. The infancy doctrine is a doctrine that allows minors to cancel most contractual obligations, as in a car purchase entered into with adults (Cheeseman, 2010). The capacity to contract law presumes that the parties in the contract have the contractual capacity to enter into the contract (Cheeseman, 2010). Minors (under 18 years old) do not have the contractual capacity to enter into a contract. Laws are in effect which protect minors who have contracts enforced against them. The laws which protect minors in contracts gives certain rights to minors which allow them to disaffirm or cancel most contracts entered into with adults (Cheeseman, 2010). “If both parties to a contract are minors, both parties have the right to disaffirm the contract” Cheeseman, 2010, p. 168). In Jeremy’s case, being that he is a minor, he has the right to disaffirm the contract and request that all monies (including down payment and six monthly payments) be refunded to him by Smooth. If Smooth refuses, Jeremy can rightfully sue Smooth for recovery of all money. It will be in the best interest of Smooth to refund all money to Jeremy and learn from their mistake in not asking for the customer’s driver’s license! In this case, even though it does not seem fair to Smooth, the law is on the side of Jeremy. If the case has to be brought before a judge, Smooth will be obligated to place Jeremy in status quo. Status quo means that Jeremy has to be restored to the position he was in before he entered into the contract (Cheeseman, 2010). In citing Cheeseman, 2010, page 168, a similar example is given where Sherry, 17 years old, purchases a car for $15,000 cash from Bruce. Bruce failed to ask Sherry for verification of her age. Before Sherry turned 18, she crashed the car. After damages to Sherry’s car from the accident, the car is now worth $3,000. Sherry can disaffirm the contract, return the damaged car
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This note was uploaded on 08/21/2010 for the course ACCT MKTG321 taught by Professor Ms.kris during the Spring '10 term at DeVry Long Beach.

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Week 4 - David part - info - (CASE) At the end of the...

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