Matrix,Inc.is the general contractor of a large commercial building project.Matrix subcontracted with Acme Flooring,Inc.to have flooring installed throughout the building.When Matrix failed to make payments to Acme as agreed,Acme stopped working.Commercial Bank,the lender for the project,orally promised Acme that Commercial would pay whatever Matrix failed to pay Acme if Acme would resume work.Acme finished the flooring,but was still not paid.Which of the following is true under the Statute of Frauds?
A)According to the primary objective test,Commercial Bank is not obliged to pay Acme as the promise must be written and signed.
B)According to the primary objective test,since Commercial Bank's promise enhanced its mortgage interest,it is liable for payment to Acme.
C)According to the main purpose test,Commercial Bank is not obliged to pay to Acme since Matrix was not a party to its promise.
D)According to the primary objective test,since Commercial Bank's promise did not involve the actual lending of money,it is not liable to Acme.

Question

Quizplus · Accepted Answer

The primary objective test requires promises to pay the debt of another to be in writing and signed, but the main purpose test focuses on the primary purpose of the promise. In this case, Commercial Bank's promise to pay Acme was made to ensure completion of the project, which would enhance its mortgage interest. Therefore, the main purpose of the promise was not to pay the debt of another, but to benefit Commercial Bank. As a result, Commercial Bank is liable to Acme for payment.