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Jill Anderson agreed to purchase William and Teresa Dawson's flower shop for $75,000. Anderson paid the Dawsons $20,000 when the contract was signed. She also agreed to pay the balance of $55,000 at an interest rate of 8.5 percent per year for five years. This agreement meant that she would be making monthly installments of $1,128.41 to the Dawsons.

During the negotiation stages of the contract, Anderson was told that all of the equipment in the store was in perfect condition.

Moreover, the Dawsons told Anderson that she could expect a profit of $75,000 per year. Anderson discovered that the equipment needed extensive repairs and that the financial condition of the business had been misrepresented so that she made considerably less than the $75,000 that the Dawsons had cited. Accordingly, Anderson sent a check to the Dawsons for $6,560.21.

On the reverse side of the check she wrote, "Payment in full for University Flower Shop." This final check would mean that after making installment payments for more than a year and a half, she had paid a total of $50,000 for the flower shop.

In a letter that accompanied the check, Anderson indicated that because she had been misled by the Dawsons about the condition of the equipment and the financial state of the business, the store had actually been worth only $50,000 at the time she purchased it.

The Dawsons disagreed but deposited the check and then brought suit against Anderson for breach of contract. Anderson argued that when the Dawsons negotiated her check, the debt was discharged under accord and satisfaction. Is Anderson correct here? Explain.

Dawson v. Anderson, 698 N.E.2d 1014.

Management Theories, Management Studies

  • Category:- Management Theories
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