Daniel Hadavi

Professor Christopher Ng
BLAW 280
30 November 2016
Wintersport v. White PC #4 p. 475
Wintersport Ltd. contacted Millionaire.com, Inc., to offer advertising, production, and printing
services for Millionaire.coms magazine, Opulence. Wintersport and Millionaire.com entered
into a $170,000 contract for the printing of one monthly issue in October 2000. They performed
that contract and launched negotiations to print the next months issue. Strong, senior vicepresident of Millionaire. com, and Leiter, president of Wintersport, handled most of the
negotiations and communications. Due to financial difficulties, Millionaire.com reduced the size
of its order for the second issue and requested payment terms on the reduced price of $80,000.
Concerned about Millionaire.coms creditworthiness, Leiter told Strong that Wintersport would
only extend credit to Millionaire.com if Millionaire.com paid a $10,000 down payment and
Millionaire.coms CEO (White) personally guaranteed the balance due. During a phone call
between their respective offices in Washington and South Carolina, Leiter requested and
received Whites oral agreement to the personal guaranty. Leiter then sent a confirming fax to
Whites office, and White express mailed to Wintersport a $10,000 check drawn on Millionaire.
coms account. When Millionaire.com failed to pay the amount due on the contract, Wintersport
filed suit against White and others. White argued that the action should have been dismissed
because the statute of frauds prevented the enforcement of his oral guaranty.
I: Does the oral agreement making White a guarantor fall within the statute of frauds?
R: A collateral contract is one in which a guarantor agrees to pay the debt or obligation that a
principal debtor owes to an obligee if the principal debtor fails to perform. A collateral contract
involves at least three parties and at least a promise by the principal debtor to pay the obligee and
a promise by the guarantor to pay the obligee. In a collateral contract, the guarantor promises to
pay only if the principal debtor fails to do so. This type of contract falls within the statute of
frauds and must be evidenced by writing. An exception does exist called the main purpose rule.
Under the main purpose rule, no writing is required where the guarantor makes a collateral
promise for the main purpose of obtaining some personal economic advantage.
A: White personally guaranteed the loan for the principal debtor, Millionaire.com. An agreement
like this would traditionally fall within the statute of frauds. The guarantor agreed to pay the debt
of the principal debtor owed to the obligee. An agreement such as this falls within the statute of
frauds and must be evidenced by writing. The exception for economic advantage exists. When
the guarantor makes a promise for the main purpose of obtaining some personal economic
advantage, the agreement falls outside of the statute of frauds. White, the CEO of
Millionaire.com, acted as the guarantor for Millionaire.com, a corporate entity. The economic
advantage gained was not one of direct personal value to Mr. White. The corporate entity gained
the advantage, making the exception inapplicable.
C: Ruling in favor of defendant, case dismissed.