Puffery and fraudulent misrepresentation

Assignment Help Financial Management

Reference no: EM132072692

1. Using complete sentences, answer in a short paragraph the following discussion questions:

1) A Question of Ethics: There is often a fine line between puffery and express warranties or puffery and fraudulent misrepresentation. Not all consumers have the knowledge and ability to determine the difference. Cases dealing with these questions have different outcomes depending upon the twelve people sitting in the jury box. After all, the person in sales has to make a living. Where do you stand on using puffery? Briefly discuss.

2. Read the following facts:

Moon, a farmer, needs to install a two-thousand-pound piece of equipment in his barn. This will require lifting the equipment thirty fet up into the hayloft. Moon goes to Davidson Hardware and tells Davidson the he needs a heavy-duty rope to be used on his farm. Davidson recommends a one-inch-thick nylon rope, and Moon purchases two hundred feet of it. Moon ties the rope around the piece of equipment; puts the rope through the pulley, and, with a tractor, lifts the equipment off the ground. Suddenly the rope breaks. The quipment crashes to the ground and is severely damaged. Moon files suit against Davidson for breach of the implied warranty of fitness for a particular purpose.

Discuss why you think Moon will -- or will not-- be successful in his suit.

3. Regarding Requirements for Negotiability::

Michael borrowed $2,970 from Cindy. Both of their signatures appeared at the bottom of the note. The note stated: "I Michael Smith owe Cindy Jones $2,970 and agree to pay her back in full" Signed on this 26th day of Septermber, 2009. More than a year later Cindy filed suit against Michael to recover on the note. Michael admitted that he had borrowed the funds, but he contended, without proof, that he had paid Cindy in full. Is this note negotiable? Which party is likely to prevail? Why?

4. Regarding Indorsements: Read the following facts:

Angela Brock borrowed $544,000 and signed a note payable to Amerifund Mortgage Services, LLC to buy a house in Silver Spring, Maryland. The note was indorsed in blank and transferred several times "without recourse" before Brock fell behind on the payments. On behalf of Deutsche Bank National Trust Co., BAC Home Loans Servicing LP initiated foreclosure. Brock filed an action in a Maryland State Court to block it, arguing that BAC could not foreclose because Deutsche Bank, not BAC, owned the note. Can BAC enforce the note? Explain.

Reference no: EM132072692

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