Quote from: SgtSpike on November 06, 2012, 04:07:13 PM

Quote from: JoelKatz on November 06, 2012, 11:39:25 AM

Here's a trivial example: Both parties to an agreement believe a truck contains 5,000 pounds of cherries and both believe that $2/pound is a fair price. They agree to sell the cherries for $10,000, based on their common correct belief that cherries are worth $2/pound and their common mistake belief that the truck contains 5,000 pounds of cherries. If it turns out the scale was broken and the cherries actually weigh 4,500 pounds, how much is "his debt"?

The argument would be that you can't look to the contract because the contract doesn't say what happens if the cherries weigh 4,500 pounds. Everything written in the contract is based on the assumption that the cherries weigh 5,000 pounds. (Unless it contains some clause about the weight, of course.) Here, it is clearly unjust to enforce the contract as agreed because the agreement was predicated on the shared belief.

Assuming you mean a buyer and a seller by "both parties," the number of cherries wouldn't make a bit of difference unless mentioned in the contract. If the buyer didn't do his due diligence in verifying the number of cherries on the truck, and didn't add wording specific to the number of cherries he was receiving, that was his problem.

I think you're missing the point. The point is that in the minds of both parties, the agreement was an agreement about what to do with 5,000 pounds of cherries. If 5,000 pounds of cherries don't actually exist, there is no actual agreement.

Suppose the contract isn't written, but there was a mutual understanding that the truck contained 5,000 pounds of cherries. Does the buyer have to make the truck contain 5,000 pounds of cherries? Or does the seller have to settle for however many pounds of cherries are in the truck? You *can't* enforce the contract as agreed because the agreement is based on a false premise -- that the truck contains 5,000 pounds of cherries.

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In the case with Patrick, the number of cherries WAS specified. Well, the interest rate was, anyway. And Patrick failed to hold up to that interest rate. It'd be like the seller of the cherries writing in the contract that he was selling 5000 pounds of cherries, but he only brings 4500 pounds, using the excuse that someone must have stolen the other 500 pounds out of the back of the truck last night. That doesn't make a bit of difference - the buyer bought 5000 pounds of cherries, not 4500, and unless a new contract can be established (likely with a reduction in price), the seller is in the wrong, not the buyer.

Why didn't the seller sell 5,000 pounds of cherries, not 4,500?

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You stick to the word of the contract no matter what. That is what is enforceable by law. Assumptions DO NOT MATTER.

The problem is that in cases like this, it's impossible to do that. The words of the contract refer to things that don't actually exist. The "cherries" spoken of in my example contract don't actually exist. Whether the contract said "5,000 pounds of cherries" or not, if that's what "cherries" meant, then it's speaking about a non-existent thing. There's no way to enforce it as written. (Unless it had some kind of clause that addressed this case.)

This case is similar. The loans the agreement was premised on turned out not to exist in the form both parties believed they did.

By the way, I now have looked at the amounts outstanding and the repayments, and I think it's inevitable that Patrick will default by any equitable standard, if he hasn't already. Even with absurdly generous terms (like repaying 40% of premiums, with no past or future interest, over three years) I don't think Patrick and his wife will make the lifestyle sacrifices they would need to in order to pay back debts that are likely not enforceable in any court of law. If he's not presently willing to negotiate, and stick to, some kind of reasonable repayment terms and schedule, he deserves a scammer tag now.