Leading Object Rule Quiz

The statute of frauds.

There is a marked difference between a promise that is purely collateral to the obligation of a third party and a promise that is mainly for the benefit of the promisor.

D owes C $1000 and C is about to levy an attachment on D's factory. S orally promises C that if C forbears to take legal proceedings against D for three months, S will pay D's debt if D fails to do so. S's promise is enforceable.

<p>The latter category, where the promise operates upon the debt of a third party and is mainly for the benefit of the promisor.</p> Signup and view all the answers

<p>His substantial pecuniary and business interest to be furthered.</p> Signup and view all the answers

<p>The consideration was mainly desired for defendant Sugarman's personal benefit.</p> Signup and view all the answers

<p>The judgment of the Appellate Division.</p> Signup and view all the answers

<p>The judgment of the Law Division.</p> Signup and view all the answers

<ol start="6"> <li></li> </ol> Signup and view all the answers

<p>None.</p> Signup and view all the answers

<p>8</p> Signup and view all the answers

<p>the 'original-collateral promise' test and the 'credit' test</p> Signup and view all the answers

<p>in most cases, the consideration for which the new promise is given will clearly benefit both the promisor and the original debtor</p> Signup and view all the answers

<p>The purpose of the April 14, 1970 meeting was to discuss the unpaid bills of the plaintiffs.</p> Signup and view all the answers

<p>At the April 14, 1970 meeting, Mr. Sugarman agreed to personally pay all outstanding bills and any future charges, if the plaintiffs continued with the work they were doing.</p> Signup and view all the answers

<p>Mr. Sugarman's letter to Schoor on June 12, 1970 stated that he was enclosing a check for $1,000, which was his own money being submitted in good faith because he had promised it to Schoor the previous week.</p> Signup and view all the answers

<p>The defendant's factual ground is that he made no promise to pay for the services rendered. His legal ground is that even if he had made such a promise, it would be unenforceable under the Statute of Frauds.</p> Signup and view all the answers

<p>The trial judge entered judgment in favor of the plaintiffs in the amount of $24,105.30, together with interest. The Appellate Division reversed this judgment, with one judge dissenting.</p> Signup and view all the answers

<p>The plaintiffs were engineering and surveying firms who provided professional services to the defendant, Holmdel Heights Construction Company. The defendant, Alan Sugarman, owned slightly more than 18% of the capital stock of the company and acted as its attorney.</p> Signup and view all the answers

<p>The leading object or main purpose rule states that if the consideration for a promise is mainly desired by the promisor for his own pecuniary or business advantage, rather than to benefit a third person, the promise is not within the Statute of Frauds.</p> Signup and view all the answers

<p>The finder of fact must examine all circumstances bearing upon the transaction, the relationship of the parties to one another, and endeavor to discern the intent, purpose, and object of the promisor. The nature of the consideration will be of great importance, particularly the extent to which performance by the promisee will directly or indirectly benefit the promisor.</p> Signup and view all the answers

<p>Depending on the particular facts and circumstances, the court has decided both ways. If the only expected gain to the promisor is in the protection of the value of his shares, the promise is held to be within the statute. However, if the promisor received a special benefit that constituted his 'leading-object,' he may be considered an original debtor and the promise would not be within the statute.</p> Signup and view all the answers

<p>The leading object or main purpose rule states that when the main purpose of a promise or agreement is to become a guarantor or surety for a debt for which a third party is primarily liable, the agreement falls within the Statute of Frauds and must be in writing. However, when the main purpose of the promisor is to serve their own interest or purpose, even if it results in paying or discharging the debt of another, the promise is not within the statute. In this case, the court must determine whether defendant's promise to pay plaintiff's fees was primarily to benefit himself or to guarantee the debt owed by Holmdel Heights Construction Company.</p> Signup and view all the answers

<p>The leading object or main purpose rule is a legal doctrine that determines whether a promise falls within the Statute of Frauds. It states that if the main purpose of a promise is to become a guarantor or surety for a debt for which a third party is primarily liable, the promise must be in writing. However, if the main purpose of the promisor is to serve their own interest or purpose, even if it results in paying or discharging the debt of another, the promise is not subject to the statute. In this case, the court must determine whether defendant's promise to pay plaintiff's fees was primarily for his own benefit or to guarantee the debt owed by Holmdel Heights Construction Company.</p> Signup and view all the answers

<p>The absence of a writing and the fact that the mining company was the principal debtor are cited as reasons for the defendant's defense, invoking the statute of frauds.</p> Signup and view all the answers

<p>A promise that is purely collateral to the obligation of a third party does not involve any interest in the subject matter of the promise in the promisor, while a promise that is mainly for the benefit of the promisor operates upon the debt of a third party and is intended to primarily benefit the promisor.</p> Signup and view all the answers

<p>The Restatement of Contracts provides the example of S orally promising C that if C forbears from taking legal proceedings against D for three months, S will pay D's debt if D fails to do so.</p> Signup and view all the answers

<p>The trial court and the dissenting member of the Appellate Division hold the view that the consideration in the case was mainly desired for the personal benefit of the defendant.</p> Signup and view all the answers

<p>The judgment of the Appellate Division is reversed, and the judgment of the Law Division is reinstated.</p> Signup and view all the answers