Question

Dana called Harvey, her stockbroker, and instructed Harvey to purchase 500 shares of Weaver Corporation at $50 per share, the current market price. Harvey assured Dana that he would complete the purchase, but he became distracted when he realized that his lunch order was wrong, again. Harvey while trying to sort out his lunch, Harvey forgot to purchase the stock. The price of the shares rose to $73 dollars that day (an increase of $23 dollars per share).

Dana was thrilled that she earned $11,500 in one day. That evening, when she was talking to her neighbor Sidney, Dana agreed to sell 300 shares of Weaver Corporation to Sidney.

Is the contract for the purchase of the stock between Dana and Harvey enforceable? Is the contract for the sale of stock between Dana and Sidney enforceable?

Answer 1

Ans: In this case, the contract for the purchase of the stock between Dana and Harvey is not enforceable because Dana does not have a prof for the stocks were bought. On page 907 (44-2b), “No writing is required for a contract by which a broker agrees with a customer to buy or sell securities for the customer. Which it is the agency agreement, not a sale made between the customer and the broker.”In addition, “Under the 1978 version of Article 8, a contract for the sale of corporate shares must be evidenced by writing or it cannot be enforced.” Which means that Dana does not have writing proof that the shares were owned by her and that is why she cannot sell it to Sidney (Danas’ neighbor). In gage 905 (44-1b), “A corporation ordinarily issues a certificate of stock as evidence of the shareholders ownership of stock it can be either on paper (paper stock) or electronically” Dana did not have electronic or paper evidence that proves she is the owner of the shares and that is why is the contract for the sale of stock between Dana and Sidney is not enforceable.