First, read the following brief case hypothetical:
Home Improvements, Inc. and Molly entered into a contract pursuant to which Home Improvements was to renovate the kitchen in Molly’s apartment for a total price of $10,000, payment due May 15. After Home Improvements finished the job, a good faith dispute arose between the company and Molly over whether all of the services had been properly performed. The company claimed that the full amount was due, but Molly argued that only $5,000 worth of services had been properly performed.
After several months of argument, Molly and Home Improvements, Inc., had a conference call and entered into an agreement whereby the company accepted a $7,500 payment in full satisfaction of the original contract. Molly then sent a letter via email and fax to the company stating that the funds had been transferred electronically into the company’s bank account. She included a receipt from the company’s bank confirming that the funds had arrived in a timely manner.
The company subsequently threatened to sue Molly for the remaining $2,500 on the original $10,000 the company claims is due.
Molly comes to you, her attorney, and asks you for legal advice on how to proceed in order to avoid paying the full $10,000. You advise Molly that she should seek to rebut the vendor’s claim by arguing that there was a valid accord and satisfaction and that the original debt has been discharged.
Review the textbook’s chapter 12 (consideration) and chapter 13 (discharge) for information on the topic of accord and satisfaction. The concepts and issues discussed are central to this assignment.
Review the textbook’s chapter 4 on Courts and Alternative Dispute Resolution. According to the American Bar Association “relatively few lawsuits ever go through the full range of procedures and all the way to trial. Most civil cases are settled by mutual agreement between the parties. A dispute can be settled even before a suit is filed. Once a suit is filed, it can be settled before the trial begins, during the trial, while the jury is deliberating, or even after a verdict is rendered.” See ABA: How Courts Work.
Why not settle the dispute even before the lawsuit starts? What are the benefits of settling before the lawsuit begins? Explain.
A demand letter is the first step in settling a civil case. What is a demand letter and how might a demand letter be effective in reaching a settlement of this dispute before the case goes to court? Explain.
Draft an effective demand letter to Home Improvements, Inc. on behalf of your client, Molly. Refer to the Nolo website, which has good instructions on how to write a demand letter. The instructions are free.
Answer the following question: If Home Improvements ignores the demand letter and proceeds with the lawsuit against Molly what will be the result? Judgment for whom? Explain using the IRAC method. (Hint: Don’t forget to include a discussion of the concept of unliquidated debt.)
Page limit: Two pages, double spaced, Times New Roman. Grade weight: 10 points.