1. Business
  2. Economics
  3. in february 1980 pratt entered into a contract to buy...

Question: in february 1980 pratt entered into a contract to buy...

Question details

In February 1980, Pratt entered into a contract to buy a Dairy Queen restaurant from the Rosenbergs. In 1982, Pratt assigned her rights and delegated her duties under the contract to Son, Inc. The assignment between Pratt and Son contained a “Consent to Assignment” clause, which was signed by the Rosenbergs. It also contained a “save harmless” clause, in which Son promised to indemnify Pratt for any claims, demands, or actions that might result from Son’s failure to perform the agreement. After his transaction, Pratt moved to Arizona and had no further knowledge of or involvement with the Dairy Queen business. Son assigned the contract to Merit Corporation in June 1984. This assignment did not include a consent clause, but the Rosenbergs knew of the assignment and apparently acquiesced in it. They accepted a large prepayment from Merit. After the assignment, Merit pledged the inventory and equipment of the Dairy Queen as collateral for a loan from Valley Bank and Trust. Payments from Merit to the Rosenbergs continued until June 1988, at which time the payments ceased, leaving an unpaid principal balance of $17,326.24 plus interest. The Rosenbergs tried to collect the balance from merit, but Merit filed bankruptcy. The business assets pledged as collateral for the loans from Valley Bank and Trust were repossessed. The Rosenbergs then brought an action for collection of the outstanding debt against Son and Pratt. Are Son and Pratt obligated to pay?

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution