CONTRACTS - STATUTE OF FRAUDS - PROMISE TO ANSWER FOR DEBT OF ANOTHER

Authors

Mary Jane Morris, University of Michigan Law SchoolFollow

Abstract

The defendants owned stock in a corporation and controlled its affairs. The corporation purchased paper needed in its production of periodicals from the plaintiffs. The defendants prepared a budget showing that the corporation would incur a deficit over a six-month period in connection with the publication of a newly acquired magazine. They then informed the plaintiffs that they would place the corporation "in funds" to enable it to "finance the anticipated deficit" and requested the plaintiffs to extend credit not to exceed ninety days so as to allow the defendants more time to consider in what manner "to advance" the necessary sums to the corporation. The defendants orally agreed that if the plaintiffs would continue to sell paper to the corporation and extend such credit, that defendants "would advance" to the corporation sufficient moneys for "it to pay" for the paper and "to meet any deficit" in its operations. The plaintiffs agreed to this and performed their part of the agreement. The defendants failed and refused to advance moneys to the corporation, as a result of which it did not have sufficient funds to meet its expenses. The corporation was adjudicated a bankrupt and the plaintiffs received a dividend which they applied in reduction of their claim for the paper delivered on credit. The difference is the sum for which the plaintiffs brought suit. Held, the oral promise of the defendants was to answer for the debt of another and thus unenforceable, being within the statute of frauds. Bulkley v. Shaw, 289 N. Y. 133, 44 N. E. (2d) 398 (1942).

Recommended Citation

Mary J. Morris, CONTRACTS - STATUTE OF FRAUDS - PROMISE TO ANSWER FOR DEBT OF ANOTHER, 41 Mich. L. Rev. 1175 (1943).
Available at: https://repository.law.umich.edu/mlr/vol41/iss6/12