Cengage Advantage Books: Law for Business 19th Edition by John Ashcroft,Katherine Ashcroft,Martha Patterson

Exercise 4

Michelle Schneider and Michael Goldmuntz were close family friends, both involved in the jewelry business, although for different companies. Goldmuntz transferred to Schneider jewelry worth just over $200,000. They entered into a written contract, which they entitled "promissory note," calling for two separate payments from Schneider to Goldmuntz totaling the wholesale value of the jewelry. Schneider pledged some of her property as collateral in the agreement. The agreement made no mention of Schneider's ability to sell the jewelry, at what price it could be sold, or any commission to be paid to Goldmuntz. When Schneider failed to make the agreed payments, Goldmuntz sued. Schneider defended that their agreement was not sale or return, but rather a consignment, so that she was not liable to pay unless or until the jewelry had been sold. Was Goldmuntz entitled to be paid on the "promissory note"?