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McShane Enterprises, Inc. v. Mandler Industries, Inc.

A-2085-96T1 (N.J. Super. App. Div. 1997) (Unpublished)

LOANS; OFFICERS—A corporation’s president who orally promised to pay a creditor of the company was found obligated to do so.

A distributor was often delinquent in paying a supply company under a contract. The distributor’s President assured the company that he would make certain the company was paid. The President further assured the company that, even if his distributorship went into liquidation, he would see to it that the company was made whole. The trial judge found that the President had orally promised to pay the debt of his distributorship in exchange for the supplier’s continued compliance with the contract.

On appeal, the President of the distributor claimed he never made an oral promise guaranteeing payment, and that even if given, such a promise was not enforceable under the Statute of Frauds. After reviewing the trial court’s findings, the Court concluded that the Statute of Frauds did not preclude a finding of individual liability against the President for making oral promises to guarantee and pay for the debt of his distributorship. The Court found that the promises were made with the main purpose of advancing the President’s personal interests. The Court refused to disturb the findings of the trial court, holding them to be based on substantial, relevant, and credible evidence.


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