Cengage Advantage Books: Fundamentals of Business Law 9th Edition by Roger LeRoy Miller

Exercise 16

Ethical Misconduct. Frank A. Pasquale used the Social Security number of his father, Frank F. Pasquale, to obtain a credit card, which he used to charge a $7,500 item. Although he was employed by his father's firm, the son also collected unemployment benefits. Later, the son, claiming to act on behalf of Frank Pasquale Limited Partnership, misrepresented his status to obtain a $350,000 loan. His father-the only person authorized to borrow funds on behalf of the partnership-was unaware of his son's misdeeds. The loan went into default. When the father learned of the fraud, he confronted his son, who produced forged documents to show that the loan had been paid. Adams Associates, LLC, which had acquired the unpaid loan from the original lender, filed a suit in a New Jersey state court against the father and the son for damages. During the trial, another family member testified to the son's general "lack of ethics." Did the son deserve this characterization? Should the court issue a judgment against the father and the son? Explain. [ Adams Associates, LLC v Frank Pasquale Limited Partnership, A.3d (2011)]