Jacob has car insurance with Big Insurer. Jacob gets into a car accident with Selena. The adjuster for Big Insurer orally agrees to pay Selena $1,000 for the damage to her car. The adjuster, however, gets in trouble with his boss for agreeing to pay too much. The adjuster tells Selena that he is backing out of the deal because the agreement is unenforceable on the basis that the statute of frauds requires that a contract to pay the debt of another be in writing.

Is the adjuster correct? Why or why not?

Question

Anne Durham

Business

30 November, 07:40

Jacob has car insurance with Big Insurer. Jacob gets into a car accident with Selena. The adjuster for Big Insurer orally agrees to pay Selena $1,000 for the damage to her car. The adjuster, however, gets in trouble with his boss for agreeing to pay too much. The adjuster tells Selena that he is backing out of the deal because the agreement is unenforceable on the basis that the statute of frauds requires that a contract to pay the debt of another be in writing.

Is the adjuster correct? Why or why not?

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Answers (1)

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Dakota · Answer 1

Check the following explanation

Explanation:

As per the statute of frauds, a written agreement is required for any amount over $500. In this case the amount is $1000 which is beyond the limit and hence the contract must be in the form of writing duly signed by both the parties. Any guarantee given by a person to pay another person's debt is considered as a surety but the amount requires it to be in written form and hence the adjuster is correct in stating that the agreement is unenforceable. Hence he is correct.