Dara Dream, borrowed $500,000 (interest free) from Cheryl Chill in May 2019 and used the money for start-up costs for her now successful on-line cosmetics business. Dream signed the Promissory Note attached in which she agreed to repay the $500,000 loan on December 31, 2021.
For the purposes of this assignment, you are an attorney representing your client, Dara Dream. Dream has come to you with advice regarding the following situation:
Dara Dream, borrowed $500,000 (interest free) from Cheryl Chill in May 2019 and used the money for start-up costs for her now successful on-line cosmetics business. Dream signed the Promissory Note attached in which she agreed to repay the $500,000 loan on December 31, 2021.
Chill has had some recent financial difficulties, is in need of cash, and telephoned Dream and made the following offer: Chill promised that if Dream pays Chill $400,000 by March 31, 2021, Chill will accept $400,000 in full satisfaction of Dream’s obligation to pay $500,000.
Dream is very interested in the proposal. Although she will have to struggle a bit to pay the money back by March, it would be worth it to her if she can be certain that she would be able to save $100,000 by paying $400,000 by March 31, 2021. Chill wanted Dream to put her promise in writing, but when she suggested it, Chill said that her word was good and was offended that Dream would suggest that she could not be trusted and would not put her promise in writing.
Dream has asked for your advice as to whether she should accept Chill’s offer. Please prepare a memo to Dream advising her on this matter. Your memo should specifically explain, using the applicable legal analysis, the issues of:
(1) Whether Chill’s oral promise will be binding and enforceable.
(2) Whether Chill putting her promise in writing would have any legal effect.
In advising Dream, you should use the appropriate legal terminology, but you should also explain clearly so that Dream, who has no background in law, will understand. Please specify any relevant statutes or case law that we have discussed in class
PROMISSORY NOTE
$ 500,000
May 15, 2019, New York, NY
For value received, I, Dara Dream, of 123 Sixth Avenue, Apt. 6E, New York, New York, promise to pay to Cheryl Chill of 1244 Third Avenue, New York, New York, on December 31, 2021, the sum of $ 500,000, with interest at the rate of 0% annually.
Dara Dream /s/
Dara Dream
Note Repayment Assignment Fall 2020(4)
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