ANSWERS TO PROBLEMS ?CHAPTER 14 Michael, a minor, operates a one-man automobile repair shop. Anderson, having heard of Michael's good work on other cars, takes her car to Michael's shop for a thorough engine overhaul. Michael, while overhauling Anderson's engine, carelessly fits an unsuitable piston ring on one of the pistons, with the result that Anderson's engine is seriously damaged. Michael offers to return the sum that Anderson paid him for his work, but refuses to make good the damage. Can Anderson recover from Michael in tort for the damage to her engine? Why? Answer: Liability for Tort Connected with Contract. No. Decision for Michael. It is clear that the negligence by Michael in carelessly fitting an unsuitable piston ring on one of the pistons, thereby seriously damaging the engine in Anderson?s car, grew out of a voidable contract; it would not have occurred had there been no contract, and it is inextricably bound to and interwoven into the contract. To allow recovery for the tort would indirectly enforce the contract, which the court would not permit. (a) On March 20, Andy Small became seventeen years old, but he appeared to be at least twenty-one. On April 1, he moved into a rooming house in Chicago where he orally agreed to pay $300 a month for room and board, payable at the end of each month. (b) On April 4, he went to Honest Hal's Carfeteria and signed a contract to buy a used car on credit with a small down payment. He made no representation as to his age, but Honest Hal represented the car to be in A-1 condition, which it turned out not to be. (c) On April 7, Andy sold and conveyed to Adam Smith a parcel of real estate that he owned. On April 30, he refused to pay his landlady for his room and board for the month of April; he returned the car to Honest Hal and demanded a refund of his down payment; and he demanded that Adam Smith reconvey the land although the purchase price, which Andy received in cash, had been spent in riotous living. Decisions as to each claim? Answer: Liability for Necessaries. (a) Even where a minor is liable for necessaries he is not liable at the contract rate but only for the reasonable value. Here, Andy is liable for the reasonable value of the room and board for April. (b) Liability for Misrepresentation of Age. Andy did not misrepresent his age. He may disaffirm the contract and, upon returning the car to Honest Hal, since he still has it, he will be entitled to a refund of his down payment, and will not be liable for the balance of the purchase price. Hal may be charged with fraudulent inducement if he had knowledge of the car?s poor condition. (c) Disaffirmance. Where a minor sells real property he may not disaffirm the transaction until his majority. Upon reaching majority and within a reasonable time thereafter he may disaffirm the sale. A minor need only return the consideration received, under the majority rule, if he still has it in his possession at the time of disaffirmance. Jones, a minor, owned a 2006 automobile. She traded it to Stone for a 2007 car. Jones went on a three-week trip and found that the 2007 car was not as good as the 2006 car. She asked Stone to return the 2006 car but was told that it had been sold to Tate. Jones thereupon sued Tate for the return of the 2006 car. Is Jones entitled to regain ownership of the 2006 car? Explain. Answer: Disaffirmance. No. Although Jones could avoid the sale as against Stone, he could not recover the car from Tate who purchased the car in good faith and for value from Stone. At common law Jones, the minor, could recover the car from the third person, Tate, to whom Stone, the other party to the contract with Jones had transferred it, even though the third person did not know of the minority and purchased the car for value. However, the UCC repudiates this rule, Section 2-403(1) provides that "a person with voidable title has power to transfer a good title to a good faith purchaser for value." On May 7, Roy, a minor, a resident of Smithton, purchased an automobile from Royal Motors, Inc., for $12,750 in cash. On the same day, he bought a motor scooter from Marks, also a minor, for $750 and paid him in full. On June 5, two days before attaining his majority, Roy disaffirmed the contracts and offered to return the car and the motor scooter to the respective sellers. Royal Motors and Marks each refused the offers. On June 16, Roy brought separate appropriate actions against Royal Motors and Marks to recover the purchase price of the car and the motor scooter. By agreement on July 30, Royal Motors accepted the automobile. Royal then filed a counterclaim against Roy for the reasonable rental value of the car between June 5 and July 30. The car was not damaged during this period. Royal knew that Roy lived twenty-five miles from his place of employment in Smithton and that he would probably drive the car, as he did, to provide himself transportation. Decision as to (a) Roy's action against Royal Motors, Inc., and its counterclaim against Roy; (b) Roy's action against Marks? Answer: Liability for Necessaries. (a) Roy, a minor, had the right to disaffirm the contract for the purchase of the automobile, if it is a non-necessary. On the other hand, if the car is considered a necessary, as in Rose v. Shehan Buick, Roy would either be liable for the reasonable value of the automobile or if allowed to disaffirm for the reasonable value of use and depreciation of the automobile. Here, since Royal accepted the return of the automobile it may have forfeited its right to the former: the reasonable value of the automobile. (b) Disaffirmance. Decision for Roy and against Marks for the return of the purchase price of the motor scooter. The general rule that the contracts of a minor are voidable at his option applies to an executed contract between two minors. To hold the rule inapplicable, the court, in Hurwitz v. Barr, D.C. App., 193 A.2d 360 said: ?would convert the privilege of infancy, which the law intends as a shield, to protect the minor, into a sword to be used to the possible injury of others.? While Marks as a minor has the option of disaffirming the contract, this option cannot nullify any rights or privileges which Roy, also, a minor, is capable of asserting. Accordingly, Marks cannot destroy Roy?s right to rescind, and the contract was therefore voidable by Roy. George Jones on October 1, being then a minor, entered into a contract with Johnson Motor Company, a dealer in automobiles, to buy a car for $10,850. He paid $1,100 down and, under the agreement, was to make monthly payments thereafter of $325 each. After making the first payment on November 1, he failed to make any more payments. Although Jones was seventeen years old at the time he made the contract, he represented to the company that he was twenty-one years old because he was afraid that if the company knew his real age, it would not sell the car to him. His appearance was that of a man of twenty-one years of age. On December 15, the company repossessed the car under the terms provided in the contract. At that time, the car had been damaged and was in need of repairs. On December 20, George Jones became of age and at once disaffirmed the contract and demanded the return of the $1,425 he had paid on it. On refusal of the company to do so, George Jones brought an action to recover the $1,425, and the company set up a counterclaim for $1,500 for expenses it incurred in repairing the car. Who will prevail? Why? Answer: Liability for Misrepresentation of Age. George Jones may disaffirm the contract even though he deliberately misrepresented his age. Most courts would hold that Jones is not estopped from asserting his minority in order to sue Johnson Motor Company. At the same time, many courts would not grant Jones the relief sought unless he offered to return the car and also to account to the company for depreciation and the value of the use of the car where he has falsified his age. Here, the car has already been repossessed by Johnson Motor Company. This problem is based upon the leading case of Myers v. Hurley Motor Co., 273 U.S. 18, 47 S.Ct. 277, 71 L.Ed. 515, 50 A.L.R. 1181, where a minor appeared to be more than 21 but made no misrepresentation to induce the making of the contract for the purchase of an automobile. The seller repossessed the car, and the minor, after attaining his majority, sought to recover the amount paid on the purchase price. The seller sought to recover a somewhat larger amount for damages to the car while in the minor's possession. The United States Supreme Court stated that: "The defense, in effect, is that the plaintiff was guilty of tortious conduct to the injury of the defendant in the transaction out of which his own cause of action arose. In such case it is well settled that the relief is by way of recoupment." The seller was held entitled to a setoff up to but not exceeding the amount of the plaintiff's claim. The company would be entitled to a setoff of $1,225, for depreciation in value, against the amount of Jones' claim. Rebecca entered into a written contract to sell certain real estate to Mary, a minor, for $80,000, payable $4,000 on the execution of the contract and $800 on the first day of each month thereafter until paid. Mary paid the $4,000 down payment and eight monthly installments before attaining her majority. Thereafter, Mary made two additional monthly payments and caused the contract to be recorded in the county where the real estate was located. Mary was then advised by her attorney that the contract was voidable. After being so advised, Mary immediately tendered the contract to Rebecca, together with a deed reconveying all of Mary's interest in the property to Rebecca. Also, Mary demanded that Rebecca return the money she had paid under the contract. Rebecca refused the tender and declined to repay any portion of the money paid to her by Mary Can Mary cancel the contract and recover the amount paid to Rebecca? Explain. Answer: Ratification. No. Decision in favor of Rebecca. A minor may disaffirm a contract for the sale of real property made by him during minority within a reasonable time after attaining his majority and he may, by acts recognizing the contract after becoming of age, ratify it. Since Mary had made two payments and caused the contract to be recorded, after she became of age, she arguably ratified the contract and will not be permitted to say that she performed these acts of ratification in ignorance of her right to disaffirm. She was not induced by fraud or misrepresentation to enter into the contract. The two payments after attaining her majority evidenced Mary?s intention to comply with the contract and constituted a ratification of it, unless the fact that she did not then know the law authorized her to disaffirm thereafter. Mary is presumed to know the law, and cannot be heard to say that she was ignorant of her legal right in that respect. Anita sold and delivered an automobile to Marvin, a minor. Marvin, during his minority, returned the automobile to Anita, saying that he disaffirmed the sale. Anita accepted the automobile and said she would return the purchase price to Marvin the next day. Later in the day, Marvin changed his mind, took the automobile without Anita's knowledge, and sold it to Chris. Anita had not returned the purchase price when Marvin took the car. On what theory, if any, can Anita recover from Marvin? Explain. Answer: Liability for Tort Connected with Contract. Marvin, the minor, having made a contract for the purchase of the car from Anita, and having received possession thereof, was the owner of the car, subject to disaffirmance. The act of disaffirmance, however, is not a new contract, which the minor, in turn, may disaffirm. Upon disaffirmance he merely had the right to the return of the purchase price. Therefore, when Marvin changed his mind, he created no new rights in himself. He had retransferred possession and title to the car to Anita. Marvin's taking the car constituted the tort of conversion, and Marvin would be liable in an appropriate action based upon his tortious act. Ira, who in 2005 had been found innocent of a criminal offense because of insanity, was released from a hospital for the criminally insane during the summer of 2006 and since that time has been a reputable and well-respected citizen and businessperson. On February 1, 2007, Ira and Shirley entered into a contract in which Ira would sell his farm to Shirley for $100,000. Ira now seeks to void the contract. Shirley insists that Ira is fully competent and has no right to avoid the contract. Who will prevail? Why? Answer: Mental Illness or Defect. Shirley should prevail. As Ira was not under guardianship, he would have to establish that he was unable to comprehend the subject of the contract, its nature and probable consequences in order to avoid the contract. The facts of this problem do not establish such a situation.
Want to see the other 3 page(s) in Ch. 14 Problem Answers.doc?JOIN TODAY FOR FREE!