1. Duncan Properties, Inc., agrees to buy a car from Shifty for $25,000. The company issues a promissory note in payment. The car that Duncan bought is defective. If Shifty still has the note, does Duncan have to pay it?
2. Kay signed a promissory note for $220,000 that was payable to Investments, Inc. The company then indorsed the note over to its lawyers to pay past and future legal fees. Were the lawyers holders in due course?
3. Shelby wrote the following check to Dana. When is it payable, and for how much?
4. Railroad issued a check to Parris which somehow came to be in Eddy's possession. Eddy indorsed the check "Railroad Eddy" and deposited it in his own account at Bank. Parris sued Bank, alleging that it was liable to him for having paid the check over an unauthorized indorsement. Is Bank liable to Parris? On what theory?
5. James, the owner of an auto parts store, told his employee, Rickey, to clean and paint some tires in the basement. Highly flammable gasoline fumes accumulated in the poorly ventilated space. James threw a firecracker into the basement as a joke, intending only to startle Rickey. Sparks from the firecracker caused an explosion and fire that severely burned him. Rickey filed a personal injury suit against James for $1 million. Is this debt dischargeable under Chapter 7?
6. YOU BE THE JUDGE WRITING PROBLEM Lydia D'Ettore received a degree in computer programming at the DeVry Institute of Technology, with a grade point average of 2.51. To finance her education, she borrowed $20,516.52 from a federal student loan program. After graduation, she could not find a job in her field, so she went to work as a clerk at an annual salary of $12,500. D'Ettore and her daughter lived with her parents free of charge.
After setting aside $50 a month in savings and paying bills that included $233 for a new car (a Suzuki Samurai) and $50 for jewelry from Zales, her disposable income was $125 per month. D'Ettore asked the bankruptcy court to discharge the debts she owed DeVry for her education. Did the debts to the DeVry Institute impose an undue hardship on D'Ettore? Argument for D'Ettore: Lydia D'Ettore lives at home with her parents.
Even so, her disposable income is a meager $125 a month. She would have to spend every single penny of her disposable income for nearly 15 years to pay back her $20,500 debt to DeVry. That would be an undue hardship. Argument for the Creditors: The U.S. government guaranteed D'Ettore's loan. Therefore, if the court discharges it, the American taxpayer will have to pay the bill. Why should taxpayers subsidize an irresponsible student? D'Ettore must also stop buying new cars and jewelry. And why should the government pay her debts while she saves money every month?
7. Dr. Ibrahim Khan caused an automobile accident in which a fellow physician, Dolly Yusufji, became a quadriplegic. Khan signed a contract for the lifetime support of Yusufji. When he refused to make payments under the contract, she sued him and obtainedajudgmentfor$1,205,400.KhanfiledaChapter11petition.Atthetimeofthebankruptcy hearing, five years after the accident, Khan had not paid Yusufji anything. She was dependent on a motorized wheelchair; he drove a Rolls-Royce. Is Khan's debt dischargeable under Chapter 11?
8. After filing for bankruptcy, Yvonne Brown sought permission of the court to reaffirm a $6,000 debt to her credit union. The debt was unsecured, and she was under no obligation to pay it. The credit union had published the following notice in its newsletter: If you are thinking about filing bankruptcy, THINK about the long-term implications. This action, filing bankruptcy, closes the door on TOMORROW. Having no credit means no ability to purchase cars, houses, credit cards. Look into the future-no loans for the education of your children.Should the court approve Brown's reaffirmation?