Solving problems Essay Example

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Date Assignment is due

Law case study

Question 1

a). From the discussion, the issue that arises between Amelia and NRT Bank relates to the validity of the contract between both parties. A valid contract is one that legally binds two or more parties, and which a court of law can enforce. A valid contract may be written, oral or partially written or oral. However, there are certain elements that a contract has to fulfill, in order for it to be enforceable or valid. There must be an offer by the offeror and an acceptance from the offeree. Also, there must be consideration, intention to contract, certainty of terms and capacity to contract for a contract to be valid (Cross et al. 189).

According to the conversation between Amelia and NRT bank, both parties had discussed terms of the loan, and the bank had made the promise to give Amelia the loan. In addition, Madison, an employee at NRT bank called Amelia and made an offer to her. Specifically, the language used by Madison was definite and final from Amelia’s perspective. Also, reasonable time had not lapsed for making an acceptance for the offer as acceptance was made after two weeks. No revocation was made to the offeree before her acceptance; thus the contract was enforceable based on the offer and acceptance. Also, there was consideration that was in the form of executory consideration as the bank was willing to offer a loan of $200,000 (Cross et al. 189). Further, both parties showed intentions of creating a legal relationship as they had legal duties, rights and obligations to undertake the contract. Amelia had given the other party clear terms for the kind of loan she wanted, and thus, the contract was based on these terms. Finally, Amelia was in a position to contract as she was not bankrupt or insane.

Another argument for Amelia regards privity of the terms of a contract, which is between contracting parties only. Madison discussed her client with an employee of Amelia’s previous bank, and, therefore, obtained information that made her act unconscionably. Madison was aware of Amelia’s disability and took full advantage of her disability in denying her the loan. The remedy for such an act was for Amelia to seek damages. On the other hand, the defense against the bank is that what Madison proposed was just an invitation to treat, and as such was not an offer, thus the contract was unenforceable. Also, there lacked a third party to approve the terms of the contract; hence the terms were ambiguous and uncertain.

From both arguments, Amelia’s legal argument carries more weight compared to that of NRT bank. Therefore, Amelia should seek the $200,000 as damages for breach of contract based on the validity of the contract, and NRT bank engaging in unconscionable dealing.

b. Amelia had a right against Big Bank based on the duty of confidentiality and secrecy. Big Bank has the duty to classify information about Amelia’s account to third parties as confidential except when the account holder is a guarantor or a danger to the nation. However, this was not the case as such information was not requested by NRT Bank but was shared between staff of both banks to the disadvantage of Amelia. Thus, Amelia had a right over Big Bank under the breach of the duty of secrecy (Muraleedharan 268).

  1. Based on the agreement of the offer by Madison by Amelia, a contractual relationship was established and thus explains why Amelia is a customer of NRT Bank.

b). A current account is a bank account that a business with many cash transactions maintains as it allows them to pay creditors using cheques, and debtors pay the business by cheques through the account too. It is important to mention that such an account has a minimum balance which should always be held and does not earn interest on savings.

Question 2

From the case study, the issue associated with the case relate to duties of the banker, as well as duties of the customer. Under the law, both the banker and the customer have duties to each other due to the debtor versus creditor, and creditor versus debtor relationship. An important law is that applied in the Tai Hing Case, where the Privy Council held that there lacked any common law other than the Greenwood duty and Macmillan duty and as such banks may place obligations on their customers by express terms in contracts (Tyree 197). Wealthy Bank applied this law in changing the terms as contained in the letter sent to its customers including Lucky Ltd. The managing director had the duty to report any fraud or forgery committed, and was aware of the bank, but assumed this duty. This is supported by the fact that management failed to inform the bank on fraudulent withdrawals made by Mary and Fred on three occasions, thus making it hard for the bank to identify the fraud. The managing director was in breach of the Greenwood duty as he failed to inform the bank on a withdrawal of $ 1 million by Mary, and also breach of duty of Macmillan as he did not exercise due care when employees were drawing fraudulent cheques, hence misleading the bank to facilitate such transactions.

On the contrary, the bank was in breach of duty to question mandate from the client. Based on the nature of withdrawals, it was incumbent upon the bank to question such transactions. Although, transactions looked valid, the law allows a banker to question that transaction to a customer. However, it becomes difficult to a banker with regards to the scope of this duty as usually the banker finds it hard to establish a forgery pupated to be from the customer. In addition, the banker provided a 10 day time frame for customers to raise such queries with them, but Lucky Ltd never reported such activities.

In conclusion, Lucky Ltd does not have any remedy against Wealthy Bank with regards to their debiting of his account with amounts withdrawn by Mary and Fred.

Work Cited

Cross, FB, Roger, LR. Miller, Frank, BC and Frank, BC. The Legal Environment of Business:

Text and Cases : Ethical, Regulatory, Global, and Corporate Issues. Mason, OH: South-Western Cengage Learning, 2012. Print.

Muraleedharan, D. Modern Banking: Theory and Practice. 2009. PHI Learning Private Limited:

New DelhiPrint.

Tyree, AL. Australian Law of Cheques and Payment Orders. Sydney: Butterworths, 1988. Print.