[Debt Trouble] Isabella Has Significant Credit Card Debt Following a Semester

question 21

Multiple Choice

[Debt Trouble] Isabella has significant credit card debt following a semester abroad in Italy. Her tuition and living expenses had ended up costing more than she had anticipated. Isabella recently took a business law class and thought that she might be able to find a way out of her troubles. She owed $2,000 to Credit Card Company A and $3,000 to Credit Card Company B. She also owed $2,000 to the local Italian university for tuition and book expenses. Isabella is in negotiations with the university over the amount owed because one of the classes she had originally enrolled in was cancelled halfway through the semester. While the cancellation of that class did not significantly affect her academic career, Isabella thought that she should get at least some deduction on the overall tuition bill. Isabella called Credit Card Company A and told them that she was a student and could not afford to pay the entire $3,000 she owed. The representative of Credit Card Company A, who was working her last day, told Isabella just to pay $50, and that would be considered payment in full. The representative sent Isabella an e-mail to that effect. Isabella was very pleased and immediately quit her job at the campus bookstore, believing that with the reduction from Credit Card Company A, she would have a sufficient amount of extra money. Isabella then called Credit Card Company B and once again pled her case as a student. She talked Credit Card Company B into taking a used car with a blown-up engine worth around $1,000 in exchange for the debt. Transfer details regarding the car were worked out through e-mail. Finally, Isabella sent the university a check for $1,000 marked "paid in full." Much to her surprise and pleasure, the university did indeed cash the check. Isabella, however, was distraught to find that within 30 days, Credit Card Company A sent her a bill for $1,950, Credit Card Company B sent her a bill for $3,000, and the university sent her a check for $1,000 along with a bill for $2,000. Faced with all these claims, Isabella decided to look for work, and ended up finding work she enjoyed as a translator. Assume all credit card company representatives had authority to make the agreements at issue.
-Which of the following would be the result in a majority of states in regard to Isabella's obligation to the Italian university?

• A) That because the debt was unliquidated and the university cashed the check, an accord and satisfaction occurred, and Isabela owes nothing.
• B) That because the debt was liquidated, no accord and satisfaction occurred, and Isabella owes the full $2,000.
• C) That in order to satisfy equitable principles, the parties would split the remaining debt with Isabella owing $1,000.
• D) That under the UCC, Isabella would be required to pay the full amount, but the university would be estopped from charging any interest.
• E) That because the university offered, through issuance of the check, full repayment, no accord and satisfaction existed; Isabella owes the full $2,000.

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