SW Legal Educational Publishing

Statute of Frauds Not Applied When Debt of Other Taken Over for Valuable Consideration
Description Company sued, claiming other party broke oral agreement to allow it to assume a debt owed by third party, if the second party would allow it to assume valuable business licenses previously held by third party. Appeals court held that, in Texas, statute of frauds did not apply in such instances.
Topic Contracts
Key Words Statute of Frauds
C A S E   S U M M A R Y
Facts Power Entertainment sued National Football League Properties, claiming that NFLP promised to transfer to Power a license to sell NFL collectible cards in return for Power's promise to assume the debt owed to NFLP by Pro Set, a licensee of NFLP. Power claimed that NFLP breached the agreement by refusing to execute the deal. District court granted NFLP's motion to dismiss. The contract was held unenforceable under suretyship (promise to assume the debt of another) statute of frauds. Power appealed.
Decision Reversed. "The Texas courts have adopted the 'main purpose doctrine,' which, broadly speaking, removes an oral agreement to pay the debt of another from the statute of frauds 'wherever the main purpose and object of the promisor is not to answer for another, but to subserve some purpose of his own....'" Power may be able to prove that it was willing to take responsibility for Pro Set's debt of $800,000 in exchange for a valuable business right it desired.
Citation Power Entertainment, Inc. v. National Football League Properties, Inc., ---F.3d--- (1998 WL 472050)
or
151 F. 3d 247 (5th Cir., 1998)

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