Sally Has a Large Farm and Significant Other Assets

question 2

Multiple Choice

Sally has a large farm and significant other assets.She agreed to loan her nephew Todd $100,000 with payments of principle and interest to be made yearly.A few years later she and Todd got into a dispute because Sally did not like his new girlfriend,Polly.Soon thereafter Todd got notice that Sally was suing him for not paying interest on the note.Todd defended on the basis that two years after the initial loan agreement was entered into,he and Sally entered into an oral agreement that he would perform services on her farm in lieu of paying interest on the note.If the court follows the reasoning of the court in the Case Opener involving Monroe Bradstad and Jeanne Garland,which of the following is the most likely result of the dispute between Sally and Todd involving whether he owes past interest amounts?

• A) Todd will be required to pay the interest amounts because the agreement involving performing services in lieu of paying interest was not in writing.
• B) Todd will be required to pay the interest amounts because the parol evidence rule bars evidence of any oral agreement outside the written agreement.
• C) Assuming the court credits Todd's account of events, Todd will not be required to pay the interest amounts because the oral agreement will be considered a separate enforceable agreement.
• D) Assuming the court credits Todd's account of events, Todd will not be required to pay the interest amounts because the oral agreement will be considered an extension and part of the original written agreement.
• E) Assuming the court credits Todd's account of events, based on the parol evidence rule, Todd will be required to pay only 1/2 of the interest amounts.

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Definitions:

Foreign Exchange Reserves

Assets held on reserve by a central bank in foreign currencies, used to back liabilities and influence monetary policy.

Current Account

A component of a country's balance of payments that measures the trade in goods and services, plus net earnings on investments, and direct transfers.

Capital Account

Part of a country's balance of payments, recording the net change in asset ownership and investments.

Foreign Exchange Markets

Global decentralized or over-the-counter markets for trading currencies, determining the foreign exchange rates.