Question

Larry has just moved from Indiana to Boston and would like to buy a house in the area. Larry goes to Fleet Bank and applies for a $1 million loan. Kevin, Larry’s friend who also lives in Boston, makes a written contract with the bank that he will be responsible for paying back the loan if Larry does not. However, Kevin does not sign the contract. Larry defaults on his loan but Kevin refuses to pay the bank. Fleet Bank sues Kevin for breach of contract.

1. Will the courts hold Kevin responsible for the loan? Why or why not?

Answer in at least two complete sentences.

Answer 1

In this case, although Kevin's promise complies with and is enforceable with written requirements of the Fraud Statute, the contract against Kevin is not enforceable as he did not sign it.

The contract shall be void if an oral contract breaches the statutes of fraud. Please remember the difference between a void and a voidable contract.  In the first place, a void contract is meaningless, whereas a voidable contract is a  valid contractual relationship except that it may be affirmed or rejected, at one party's option.