Review Problem: The Case of the Independent Cab Driver

[From: Ayres and Klass, Studies in Contract Law (9th ed., 2017), p. 185] Reserve collection

During a lull in the proceedings of a Legion convention. A few of the participants made their way to a nearby bar for refreshments and conversation.

One of the men, Marty Lawless, began bemoaning the lot of a cab driver. Since his discharge from the Army, Marty had been driving a cab in a metropolitan area for a large company. "If I could only lay my hands on twenty thousand bucks," he remarked, "I could really make out. I could get a cab and license of my own and start working for myself, instead of the other guy."

In the group was Jim Craven, who had attended law school after his discharge and had built up a lucrative personal injury practice. After questioning Marty a bit more regarding what the latter could do with a cab of his own, Jim said to him: "I'll loan you the money. Pay it back when you want, up to ten years. And it won't cost you a thing. I owe you a lot more than that, heaven knows." (This last remark referred to the fact that Jim credits Marty with saving his life in battle.)

But Marty was hesitant. He didn't want any "charity." He answered: "I appreciate your offer, Jim. I really do. But I couldn't take it. I think a bank will loan me the money."

"Aw, Lawless, you're crazy to pass up a deal like that," said John Coburn, another member of the group.

Jim spoke up: "Now hold on. It's not charity, if that's what you're thinking. We'll make it carry one percent interest. How's that?"

This was too good to pass up, thought Marty. And, after all, Craven could afford it. So he replied: "Thanks a lot, Jim. It will sure give me a boost. And don't worry, you'll be repaid."

Jim then raised a glass and said to everyone present: "All right, everybody. Let's drink to the world's newest independent cab driver!" Everyone complied.

Upon returning home, one of Marty's first stops was to the office of his employer, where he resigned his job.

But a few days later he received a letter from Craven in which Craven said he had a "big deal" come up and didn't have the money to loan now. He expressed his regrets and said he hoped they "can get together real soon."

Lawless has hastened to your office and now awaits your advice. Advise him.

This book, and all H2O books, are Creative Commons licensed for sharing and re-use with the exception of certain excerpts. Any excerpts from the Restatements of the Law, Principles of the Law, and the Model Penal Code are copyright by The American Law Institute. Excerpts are reproduced with permission, not as part of a Creative Commons license.