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BUSINESS LAW 16: Parties disagreed on whether loan was intended to be payable on demand.

This case arises from an initial stock purchase agreement and a subsequent loan transaction. The parties entered into a Stock Purchase Agreement whereby plaintiffs purchased a 49 percent interest in Company for a payment of $490,000. After the agreement was signed, Plaintiffs discovered that Company owed approximately $170,000 to its creditors, who held liens against Company’s assets that prevented transfer of equipment and inventory to Michigan.

Liens on Assets

Defendant informed Plaintiffs and was amenable to letting Plaintiffs out of the agreement. Plaintiffs, however, wanted to proceed and provided defendant $170,000 to pay the outstanding amounts.

After defendant and Company moved to Michigan, the relationship between defendant and plaintiffs deteriorated and there was disagreement over defendant’s role in the management and operation of Company. Plaintiffs eventually filed against defendant. The parties disagreed whether the $170,000 payment was intended as payment or was intended only as a loan.

Loan Repayment

The goal when interpreting contracts is to enforce the parties’ intent. In this case the evidence established that the loan was not intended to be payable on demand, and that the parties instead contemplated a time period for repayment. Defendant testified that when plaintiffs first offered to pay the $170,000, Defendant told plaintiffs during a phone conversation that the money would be in the form of a loan. Defendant explained that because this was occurring so quickly, he was not thinking about a repayment schedule or a rate of interest and the two did not expressly agree on these terms at the time.

In addition, when discussing the bank drafts, plaintiffs maintained that he did not authorize the 7 percent interest rate, because defendant had already told plaintiffs a that defendant would pay 15 to 20 percent. This testimony also indicates that plaintiffs expected repayment over time with interest, not that he contemplated that the $170,000 was to be a demand loan, in which the principal would be due upon demand.


In a pretrial ruling, the trial court found that the $170,000 payment was intended as a loan, but further ruled that the terms of the loan should be decided by a jury. At trial, the jury found that defendant was personally liable for the $170,000 loan and determined that the loan was to be repaid over 60 months, with an interest rate of seven percent.

Litigating Business Matters

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REAL ESTATE 89: RM had not included any language in the deed providing that the property was a joint tenancy with full rights of survivorship, the property instead became a tenancy in common.

RM drafted the deed without seeking counsel and mistakenly believed that, if either she or FK died, the property would fully pass to the surviving tenant. FK’s will provided that if his wife predeceased him—which she did—the personal representative of his estate should sell any residual property that he owned and divide the cash proceeds equally among his surviving children.

FAMILY LAW 83: A trial court can terminate a parent’s rights and permit a stepparent to adopt a child.

A trial court has discretion to terminate a parent’s rights and permit a stepparent to adopt a child when the conditions of MCL 710.51(6) are met. MCL 710.51(6)(b) requires the petitioner to establish that the other parent had the ability to visit, contact, or communicate with the children, and substantially failed or neglected to do so for a period of two years.

PROBATE 53: The trust agreement included an Incontestability Provision.

A settlor’s intent is to be carried out as nearly as possible. Generally, in terrorem clauses are valid and enforceable. However, a provision in a trust that purports to penalize an interested person for contesting the trust or instituting another proceeding relating to the trust shall not be given effect if probable cause exists for instituting a proceeding contesting the trust or another proceeding relating to the trust.

FAMILY LAW 82: Court stated it would terminate the personal protection order (PPO) after the parties present documentation of the initiation of the divorce proceedings.

However, the trial court concluded that these matters should, in fact, be in the province and the jurisdiction of the Family Division and in that respect, having issued a personal protection order, the Court stated it would terminate the personal protection order after the parties present documentation of the initiation of the divorce proceedings.

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