Loan Repayment Details - Case Study Example

Case Study, Law Question one Peter and Sue had agreed that the loan was supposed to be repaid prior to July 1st both the principal amount as well as the interest. It was the responsibility of Peter to honor the terms they had agreed (Edward & Donald 2004, p.4). Partial early settlement is acceptable in any lending contract. When an agreement is being made, there should a provision that will enable the borrower to make early settlement either partial or in full. If Peter could have resettled the loan on 2nd June, he was liable pay less due to interest (Finch and Fafinski 2008, p.5). However, he paid 20,000 only meaning there was a balance of 5000. He was also to pay the interest with respect to terms of the interest of 12% as they had agreed. Sue has every right under the law of pursuing the money Peter owes her. According to the terms of their agreements, Peter was supposed to clear Sue’s debt by 1st of July. Since the date that Peter was expected to settle the debt had come, Sue had a legal right to request Peter to pay the cash he owed Sue (Emerson 2004, p.18). Similarly, Peter had the responsibility of honoring the terms of their agreement. If Peter would fail to honor this agreement, Sue has a legal right to pursue Peter to settle the debt through the legal processes. However, it was wise for Sue to contact Peter and ask him to settle the debt. If Peter fails to honor the agreement, Sue has every right and ground to follow the legal process so that she can be paid her debt. The legal process entails even suing Peter. The bottom line of this issue is Sue as the lender has every right to request Peter to settle the remaining debt (MacIntyre 2010, p.13). Similarly, Peter has the responsibility of honoring their agreement by paying Sue 5,000 that remained as well as the interest. Question two On this scenario, Peter has repaid Sue the sum of 25,000 only. This implies that he has paid the principal amount only less the interest. This is contrary to their agreement. Peter was supposed to pay both the principal amount and interest on 1st July. This implies that he has breached the agreement they had made. As per the rights of the lender encompassed in the common business law, an agreement is a contract (Keenan and Riches 2009, p.37). Once the two have entered in a contract, it is unlawful to breach the contract. Peter failing to pay the interest is breaching the contract between him and Sue. According to the common business laws, breaching of a contract is an offense. This is implies that when it comes to contract breaching one is liable of facing the rule of law. Peter has automatically breached the contract they had entered with Sue. This implies that Sue has every right to follow the legal process to make Peter comply with every term of their agreement. It is, therefore, evident that Sue is free to claim for the interest simply because Peter was well aware of what he was required of him before he borrowed the money. The fact that no reason was given as to why Peter did not pay the interest, Sue has every right to assume that he did it willingly and out of ignorance (Harpwood 2005, p.17). Since Sue has every legal right according to the common business law of pursuing her debt, she has every right of even suing Peter so that she can be paid her interest. Question three This scenario is quite tricky. First of all the deadline to which Peter was supposed to pay Sue her money in full had come. Peter offered Sue a cheque for 18,000 and intimidated her to accept that sum. He added that failure to accept that sum as in final and full settlement of the debt she would not receive anything. Sue ended up accepting and banking the cheque although reluctantly. This is the breaching of the contract (Rouse 2006, p.3). Sue was not supposed to accept that cheque from the beginning. According, to their agreement Peter was supposed to pay the sum in full. It was hence unlawful to give Sue less money and to intimidate her so as to accept the sum he was offering her (Marsh & Soulsby 2002, p.35). It is acceptable for creditors to consider special payments of the debt in case the debtor is faced with financial hardship. The bottom line of the whole issue is that the debt will be paid in full although it will force the creditor to consider the debtor to pay the debt differently as they had agreed (Kelly et al. 2002, p.27). The creditor and the debtor can agree to make use of either formal or informal payments as long as the debt will be fully paid. Sue came to find later that Peter won a large sum of money on a lottery. She was very free to sue Peter so that she could be paid her debt. The fact remains that she had the right of suing Peter from the beginning since he deviated from the terms and conditions they had agreed. Having won the monies or not he had an obligation of paying Sue her cash as they had agreed. This implies that Sue had every right of applying the rule of law to be paid her due. Question four In this scenario, Peter is seeking for sympathy having lost money in stock market. According to the agreement Sue and Peter had entered, Peter was liable to pay Sue her debt irrespective of any events that will take place in his life. According to the common business law, the only favor that Sue could do to Peter is considering his situation and review the modes by which he could repay the loan (Furmston 2006, p.23). After Sue had learned the Peter’s situation, she had decided to write off the loan that Peter had. She also promised Peter of her decision to write off the loan. However, Sue decided otherwise after a few days. She changed her mind and decided to claim all her monies. Although she had decided to write off the debt, the fact that Peter owed her cash has not changed. Peter is liable to pay Sue her cash because they had agreed that he was to pay her cash come July 1st (Hood 2007, p.15). Although she had decided to forego the debt, she also had the right of claiming her due. Writing off of the loan was very different from the agreement they had entered (Elliott and Quinn 2000, p.8). The contract was very categorical in that after receiving cash as the debt by July 1st he had an obligation of paying back the debt. Irrespective of Sue’s indecisiveness on whether to write off or to pursue she has every legal right to claim her monies and to be paid in return. Question five This scenario is a quite tricky in some ways. First of all Peter decided to repay the debt with a piano rather that cash as they had agreed. Since it was an agreement between the two and both had agreed to change the mode of debt repayment it was okay (Harris 2006, p.6). It is acceptable to change the means of debt repayment especially when the debtor is faced with financial problems. However, Peter claimed that the grand piano was worth 25,000. This sum was equivalent to the principal amount only. This means that on top of this amount Peter is supposed to pay the interest. He, however, did not indicate how he would pay Sue the interest. He had a responsibility of paying the interest since agreement’s terms had indicated that he was supposed to pay the loan and interest (Abbott et al. 2007, p.34). The major complication rose by the fact that Peter knew and hence believed that the grand piano was worth 16,000. He, however, failed to disclose this fact to Sue, who was made to believe that the grand piano had a value of 25,000. It is against the contracts law to use lies so as to entice him or her to agree your terms. The aspect is referred to as misrepresentation. It is a scenario where one is enticed through lies to enter a contract by the contracting party. In such a scenario, the disadvantaged party has the right of suing the other party with the misrepresentation charges (Gail & Marya 2003, p.78). Peter, therefore, had two mistakes. One of the mistakes is failing to comply with the terms and conditions of their agreement, and secondly the misrepresentation (Gillies 2004, p.45). The fact that Sue discovered that Peter lied to her, she has a perfect ground and right of suing Peter so that he can be paid the outstanding balance together with interest. It was her right to be paid the debt in full since their agreement had cleared specified so. In terms of misrepresentation in any given contract, the misrepresentee in this case being Sue has the right to withdraw the contract they had entered (Emerson 2009, p.24). Besides being paid the balance, she could also opt to withdraw from the previous deal and give new terms. Either way she had every right to claim her balance as well as the interest as the terms of their agreements initially stated. References List Abbott, K., Pendlebury, N., & Wardman, K. (2007). Business law. London: Thomson. pp.34 Edward, J. C. & Donald, R. N. (2004). Business law and moral growth. American Business Law Journal 27 (1), pp. 1–39. Elliott, C. and Quinn, F. (2000). English Legal System, 3rd Ed. London, Longman. Pp.8 Emerson, R. W. (2004). Business law. Hauppauge (N.Y.), Barrons. pp.18 Emerson, R. W. (2009). Business law. Hauppauge, N.Y, Barrons Educational Series. Pp.24 Finch, E. and Fafinski, S. (2008). Tort Law (Law Express) (2nd Ed). New York, Longman. Pp.5 Furmston, M P. (2006). Cheshire Fifoot & Furmston’s Law of Contract, 15th ed. New York, Oxford University Press. Pp.23 Gail, A. L. & Marya, N. C. (2003). Contemplating “enterprise”: the business and legal challenges of social entrepreneurship, American Business Law Journal 41 (1), pp. 67–114 Gillies, P. (2004). Business law. Sydney, Federation Press. pp.45 Harpwood, V. (2005). Modern Tort Law (1st Ed). London, Routledge–Cavendish. Pp.17 Harris, P. (2006). Introduction to Law (Law in Context), 7th Ed. New York, Cambridge University Press. Pp.6 Hood, P. (2007). Principles of lender liability. Oxford, Oxford University Press. Pp.15 Keenan, D and Riches, S. (2009). Business Law, 8th Ed. London, Longman. Pp.37 Kelly, D., Holmes, A. E. M., & Hayward, R. (2002). Business law. London, Cavendish. Pp.27 MacIntyre, E. (2010). Business Law (4th Ed), Longman. Pp.13 Marsh, S. B., & Soulsby, J. (2002). Business law. Cheltenham, Nelson Thornes. Pp.35 Rouse, C. N. (2006). Bankers lending techniques. London, Lessons Professional Publishing. Read More