Before we look at Sally's defenses, we need to know how the law will handle the I.O.U. in this case. The I.O.U. was made between Ron Rowdy and Mike Meek. It was for a $100 bet on who would win the Super Bowl. The men made the bet while intoxicated, and the following day, when Rowdy's team won the Super Bowl, he demanded $1,000 from Meek.
This contract formed between Rowdy and Meek is unenforceable. This is because there is no consideration between the two men. Rowdy receives the $1,000 I.O.U., but Meek receives nothing. When there is no consideration given, then the contract becomes unenforceable. This means that the I.O.U. becomes worthless.
Second, according to the Bills of Exchange Act, "A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay, on demand or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person or to bearer." (Bill of Exchange Act, 1985) The I.O.U. was a piece of paper that had "I.O.U. $1,000" written on it, and was signed by Meek. Therefore it is not a bill of exchange because it is missing vital information. Also, "An I.O.U. is not a promissory note, as it is not negotiable." (Duhaime) An I.O.U. is just a written acknowledgement of a debt. Therefore it cannot be used as a bill of exchange.
The first legal issue the Sleez is facing is from Tim Timid. Sally received the $1,000 I.O.U. from Rowdy, and later that day she traded the I.O.U. to Timid in exchange for $800 worth of jewelry. When Timid discovered that Meek, who had originally signed the I.O.U., wouldn't honour the agreement, he went back to Sleez. He demanded she return the jewelry, and even threatened her. Sally finally agreed to give Timid $700 in exchange for the I.O.U. He agreed and left. Now he is taking legal action against Sleez to either have the jewelry returned to him or an additional $100 paid to him.
Upon analysis of five categories of contractual situation, the actual contract that was formed between Meek and Sleez to exchange the I.O.U. for $700 is voidable. This contract is voidable due to duress. Duress states that the use of physical harm or the threat of physical harm renders a contract voidable. During the encounter between Timid and Sleez, Timid mentioned how Sally's windows were made of glass, and he mentioned how teenagers had been known to throw rocks at such windows. This would be physical harm to Sally's company. After this threat, Sally had a change of heart, and offered Tim $700 out of fear. In court, Sally would be able to have this contract set aside, and each party would return to the position they were in before the contract. This means that Timid would have the I.O.U. and Sleez would have the $700 she paid him.