Paul S. Franklin, EJP CPA
August 12, 2014
This case study involves two persons: Stephen Son and Jinsoo Kim, and the subject of the case to determine if Kim, plaintiff, should be granted reimbursement of losses promised by Son.
Jinsoo Kim, investor, invested $170,000 into one of the Stephen Son’s corporations. However, Son’s corporations did not sustain competition and failed. Later, the two accidently met at the restaurant. Feeling guilty, after consuming abundant amount of alcohol, Son promised to repay the debt. To support the words, Son gave Kim a promise written in blood. Kim accepted the document in exchange for promise not to sue Son for received damages. However, later on, then the Son sobered up, he refused to honor the promise. Kim filed a suit trying to reinforce the contract (Beatty, Samuelson, Bredeson, 2013, p. 164).
To try to figure out who was right in this situation, I want to identify a law that should be used to support the argument: Common Law or UCC. To be able to make a choice, let’s give the laws definitions; and look at the differences between them.
Uniform Commercial Code (UCC) finds application in deeds associated with commerce, and deals with transactions of personal property. It is used in sales and leases, bunking and transactions with use of negotiable instruments, bank deposits and transfers, bulk transactions, title transfers, operations with real estate (Application of the UCC p.5).
Common law is adopted by most of the states, excluding Louisiana, and deals with real estate, service, insurance intangible assets and employment contracts.
The laws are similar, but have differences. The differences are as followed:
1. In the Common Law, mirror effect and counter offer would be considered as a rejection of the existed offer. It does not necessarily happen in UCC. When counter offer is made it does not lead to cancellation of the contract;
2. In UCC the main focus is quantity, whereas in Common Law, the main terms are: quantity, price, performance time, nature of work and identity of offer;
3. When the Common Law does not allow revoking of the option contracts, the offers made by a firm is irrevocable if the deal is made in writing in UCC;
4. Different time frame in Statute of Limitation: it is four to six years in Common Law; and just four years in UCC (Pabhat, 2010, p.9).
So, after reviewing the two laws, I would refer this case to properties of UCC.
However, to tell exactly if Kim can hope for remedy of the losses, we also need to see if the consideration was made while communicating with the defendant.
Consideration means that if you want to get something you have to give something back. It has to be something of value, not necessarily the same value, but valuable to the person at the moment; and an object of value requested by promisor. In this case the consideration is lawful, unless:
It is illegal;
It is fraudulent;
It involves or implies injury of another person;
It is immoral, or against public safety (CSJune89, 2009).
Contract can also be voidable if on the moment of entering the contract the person was intoxicated. In this case the fact can be proven. It does not happen often that the dispute is settled in favor of intoxicated person because it is not easy to prove that on the moment of creating the contract the person was too