Burning lake tire from raising defenses against chase

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Reference no: EM132252508

Business Law - Third Parties

Burning Lake Tire Company is a small business owned primarily by the Jones family of Cleveland, Ohio. Bob Jones, President of Burning Lake Tire, signed an agreement with Scotti Commercial to lease a machine designed to bend exhaust pipes so that mufflers could be fitted into different makes of cars. The lease was a pre-printed contract drafted by Scotti and contained lots of standard language (aka, “small print”). Specifically, the lease contained the following language: “Assignment: This lease may be assigned by Scotti to a third party without notice, and in such event Scotti’s assignee shall have all rights and remedies of Scotti. Burning Lake Tire agrees that its obligations shall not be subject, as against any such assignee, to any defense or counterclaim available to Burning Lake Tire against Scotti.” Shortly after signing the lease, Scotti assigned its rights to Chase Bank and notified Lake Tire of the assignment. Burning Lake Tire made 11 payments to Chase but then informed Scotti and Chase that it would make no more payments because the machine failed to work. Scotti filed for bankruptcy. Chase sued Burning Lake Tire, demanding the rest of the money. Lake Tire counterclaimed against Chase, alleging breach of contract.

Should Chase be able to enforce the waiver clause (under UCC 9-403), prohibiting Burning Lake Tire from raising defenses against Chase?

a. In your response, first draft arguments on behalf of BOTH Chase and Burning Lake Tire as to why each should win (using both legal and equitable arguments).

b. State the rules of law that apply to the situation and then conclude by deciding which party should win and why (if you were a judge in this case).

Reference no: EM132252508

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