Matt is unable to obtain a loan without some type of additional reassurances. Matt comes to you for assistance. You are willing to help Matt, but you want to protect yourself from liability as much as possible. Would you prefer a surety or a guaranty? The bank issuing the loan to Matt also wants to protect itself as much as possible. Would the bank prefer a surety or guaranty? Is your oral assurance enough to form a surety or guaranty?
Scenario 2
In partnership with MasterCard, Beta University requests that the full-time professors apply for a corporate credit card to use for travel expenses to conferences and similar expenses. Dr. Benedict was issued a corporate card and used it to take his wife to New York for their anniversary. If Dr. Benedict does not pay the charges, is the University liable? Why or why not?
Scenario 3
Baxter Manufacturing purchased a welding machine from Wilson Equipment in 2011 for $250,000. Because of the good relationship between parties, Wilson extended credit to Baxter for the purchase of the machine. Last month, Baxter sold the injection-molding machine to a small start-up company for $1,500, two days before filing for bankruptcy. Baxter still owes Wilson $150,000 for the welding machine. Focusing on concepts in the e-text chapters on Consumer Protection and Bankruptcy, what are the legal and ethical issues involved in Baxter’s sale of the machine? What recourse does Wilson have in recovering the monies owed on the machine?
Discussion Question Part II
Using the business that you created in Week 1, answer the following question in one paragraph. Use laws, examples or cases to support your response.
Assume your company extends credit to customers who purchase your products. How will your company protect itself to ensure payment of the loans and avoid losses in the event a customer files bankruptcy?
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