Question

7. Eva and Maria entered into a written contract pursuant to which Eva was to render decorating services for Maria for a total price of $75,000. After the services had been performed, a good faith dispute arose between Eva and Maria over whether all of the services had been properly performed. Eva claimed that the full amount was due, but Maria argued that only $50,000 worth of services had been performed. After several weeks of argument, Maria sent a check for $60,000 to Eva on which Maria had written "payment in full for decorating services." (a) Eva endorsed the check, without making any further notations on it, deposited it and sued Maria for the remaining $15,000 she claims is due. Judgment for whom? Explain. (b) Instead of the facts in (a) assume that Eva wrote "under protest" on the check when she endorsed it and, after depositing it, sues Maria for $15,000. What result? Explain. (c) Instead of the facts in (a) and (b), assume that Eva and Maria had a telephone conversation in which Eva agreed to take $60,000 in full satisfaction of Maria’s obligation under the contract. Maria then sent the check, with a letter referencing the telephone conversation. Eva wrote "under protest" on the check, endorsed and deposited it, and then sued Maria for $15,000. What result? Explain.

Answer 1

In case (a), judgment would likely be in favor of Maria, while in case (b), Eva would be able to sue Maria. In case (c), Eva would not be able to sue Maria.

Step-by-step explanation:

(a) In this case, judgment would likely be in favor of Maria. By writing 'payment in full for decorating services' on the check, Maria was making an offer of compromise. Eva's endorsement of the check without any further notations indicated acceptance of the offer, and by depositing the check, Eva essentially agreed to settle the dispute for the amount specified on the check, which was $60,000. Therefore, Eva would not be able to sue Maria for the remaining $15,000.

(b) If Eva had written 'under protest' on the check when endorsing it and then deposited it, it would indicate that Eva did not accept the offer of compromise. In this case, Eva would still be able to sue Maria for the remaining $15,000, as her endorsement with the notation 'under protest' would preserve her right to challenge the check as not being in full satisfaction of the debt.

(c) If Eva and Maria had a telephone conversation in which Eva agreed to take $60,000 in full satisfaction of Maria's obligation under the contract, and Maria sent the check along with a letter referencing the conversation, Eva's endorsement of the check with the notation 'under protest' would not be effective. The letter from Maria referencing the conversation serves as evidence of their agreement, and Eva's acceptance of the check indicated acceptance of the offer of compromise. Therefore, Eva would not be able to sue Maria for the remaining $15,000.

Answer 2

(a) Eva endorsed the check, without making any further notations on it, deposited it and sued Maria for the remaining $15,000 she claims is due. Judgment for whom?

Maria's debt is settled (cancelled) because Eva accepted the check and did not write "under protest" or "without prejudice" when she endorsed it. This debt was an unliquidated debt since maria and Eva did not agree on the total amount due, but since Eva cashed the check without writing down any type of notation with respect to their disagreement, the debt will be considered settles.

(b) Instead of the facts in (a) assume that Eva wrote "under protest" on the check when she endorsed it and, after depositing it, sues Maria for $15,000. What result?

If Eva wrote under protest, then she is not accepting Maria's payment. She is entitled to cash the check because she might need the money, but she is making it clear that she doesn't agree with the settlement. Eva could win the suit (that also depends on other factors not specified in the question).

(c) Instead of the facts in (a) and (b), assume that Eva and Maria had a telephone conversation in which Eva agreed to take $60,000 in full satisfaction of Maria’s obligation under the contract. Maria then sent the check, with a letter referencing the telephone conversation. Eva wrote "under protest" on the check, endorsed and deposited it, and then sued Maria for $15,000. What result? Explain.

Unless Maria can prove that Eva agreed with the $60,000 payment, then a court would not even consider the telephone call and the outcome would be similar to question (b). The problem with oral agreements is that one party will say this and the other party will say something else. You need some type of proof in order for an oral agreement concerning a $75,000 (or even $60,000) dispute to be valid.