Question

This is a post first discussion forum. Please respond to the following scenario: Chapter 25 Discussion Forum A Question of Ethics-Guaranty Contracts.73-75 Main Avenue, LLC, agreed to lease commercial property to PP Door Enterprise, Inc, if its principal officers executed personal guaranties and provided credit information. Nan Zhang signed the lease as manager of PP Door. The principals of PP Door signed the lease and guaranty agreements. When PP Door failed to make monthly payments, the lessor sued PP Door and its owner, Ping Ying Li. Li testified that she was the sole owner of PP Door but denied that Zhang was its manager. She also denied signing the guaranty agreement. She claimed that she had signed the credit authorization form because Zhang had told her he was too young to have good credit. Li claimed to have no knowledge of the lease agreement. She did admit, however that she had paid the rent because Zhang had been in a car accident and had asked her to help pay his bills, including the rent. [73.75 Main Avenue, LLC . PP Door Enterprise, Inc, 120 Conn.App. 150, 991 A. 2d 650 (2010)] (See Other Laws Assisting Creditors.) 1. LI argued that she was not liable on the lease agreement because Zhang was not authorized to bind her to the lease. Do the facts support Li? Why or why not? 2. LI claimed that the guaranty for rent was not enforceable against her. Why might the court agree? Please post and respond to two other students.

Answer 1

)In the current scenario, the guaranty agreements were signed by the principals and were legally executed and were binding on the company. Zhang had signed the lease agreement as a manager to the company, hence a legal binding agreement and had received signed credit authorization forms, hence the owner of the company is liable as it is a legal agreement entered by both parties. LI is liable although fraud was committed by Zhang with her as the documents signed by her is legally enforceable and makes her liable to pay to Main Avenue, LLC.

b)The guaranty for rent is not enforceable against her, the might agree if she is able to prove with the documentation and valid evidence, that she was not aware of the lease agreement and the credit form provided by her in good faith to Zhang was not for lease but for providing aid to Zhang as he was too young for credit.