Chapter 12, Exam III
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Dave's Hobby Town and Eva's Yarn Shoppe are adjacent stores with adjoining parking lots. Dave offers Eva a discount on purchases from Dave's store if Eva will not tow the cars of Dave's customers who park in Eva's lot Dave's discount is legally sufficient consideration
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because it is a promise of something of value
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Dave's Hobby Town and Eva's Yarn Shoppe are adjacent stores with adjoining parking lots. Dave offers Eva a discount on purchases from Dave's store if Eva will not tow the cars of Dave's customers who park in Eva's lot Eva's forbearance from towing is legally sufficient consideration
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because it is a promise of something of value
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Axel, the owner of Bar-B-Q Cafe, announces that he plans to paint its front fluorescent red. Cleo, the owner of Delicate Dress Shop next door, promises to pay Axel $1,000 to use a more conservative color. Axel agrees. Cleo's promise is
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enforceable, because Axel agreed to refrain from doing something that he was legally entitled to do
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Jill promises to pay Kyle $500 because "he does not have as much money as other people." Jill's promise is
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not enforceable because Kyle has not given consideration in return
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Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal - a student loan accruing interest at a certain rate and payable beginning on a certain date - was unfair because the consideration for their contract was inadequate "Adequacy" of consideration refers to
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"how much" consideration is given
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Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal - a student loan accruing interest at a certain rate and payable beginning on a certain date - was unfair because the consideration for their contract was inadequate If, as Brad claims, the consideration in this problem is inadequate, it may indicate a lack of
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bargained-for exchange or mutual assent
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Coverage, Inc. (CI), coordinates an insurance network that includes 1 million potential patients. By contracting with CI, a medical provider gains access to the network in exchange for accepting payment at lower than market rates. Doctors, Inc., contracts with CI but, when few patients are forthcoming, files a suit to recover the difference between the contract and the market rates. The court will most likely rule that the contract is
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enforceable only because the contract does not lack consideration
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Quality Steel Corporation files a suit against Rite Tool Company, claiming that the consideration of their contract is inadequate. The court will most likely not examine the adequacy of the consideration if
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something of value passed between the parties
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Digital Computers (DC) agrees to sell 100 hard drives to Eagle Computer Stores. Later, to obtain a higher profit, DC demands an extra $100 per drive to complete delivery. With no other source for DC drives, Eagle reluctantly agrees. Regarding this agreement, a court would likely
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not enforce it
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Applied Methods Corporation promises to give stock options to Brad, a production designer, for processes he has already designed. This promise is
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unenforceable
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National Business Company and One-State Sales, Inc., agree to simultaneously rescind their contract and enter into a new agreement under which their duties are the same. National later sues One-State to enforce the new agreement. The court
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may apply the preexisting rule or allow the rescission
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Baked Goods Company agrees to supply Comida Cafe with all the corn ships that it requires for a year. A sudden demand for ethanol results in a shortage of corn, and the price rises sharply. Baked Goods asks Comida to pay a higher price for the chips. This request is
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valid due to the unforeseen difficulty of the sudden price increase
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Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay. If CCC offers no reason for the extra $100,000, but says only that it will otherwise stop construction, the agreement is
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unenforceable due to the preexisting duty rule
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Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay. If CCC offers, as a reason for the extra $100,000, that ordinary business expenses have increased, the agreement is
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unenforceable due to the preexisting duty rule
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Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay. If CCC offers, as a reason for the extra $100,000, that extraordinary unforeseen difficulties will add considerable cost to the project, the agreement is
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enforceable because of the unforeseen difficulties
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Todos Ltd. agrees to supply United Steel, Inc., with minerals from Venezuela. When the government is unexpectedly overthrown in a revolution, Todos can obtain the goods only at a much higher price. United agrees to pay but later files a suit to recover the difference. The court will most likely rule that
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an unforeseen difficulty supported the contract modification here
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Superior-Plus Properties, Inc., and Topps Construction Company sign a contract that specifies the amount to be paid. Additional compensation may be justified by
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extraordinary difficulties unforeseen at the time of the contract
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Sal contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract The next day, Sal changes her mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sal and Tasty
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may agree to a new contract that includes the new price
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Sal contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract Sal and Tasty
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may rescind their contract to the extent that it is executory
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Mary promises to pay her assistant Ned $10,000 in consideration of the services he provided over the years. Mary never pays Ned. Mary is
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not liable, because the consideration is in the past
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MicroCorp hires Nick to work for one month at a weekly salary of $400. A MicroCorp representative orally agrees two weeks later to double Nick's salary. This agreement is
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unenforceable because Nick has incurred no additional detriment in exchange for MicroCorp's promise
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Speedy Assembly Company promises its employees a 10-percent raise at the end of the year if productivity has increased and management feels it is warranted. Speedy must
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do nothing.
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General Credit Corporation's promise to pay its employees a year-end bonus "if it seems like a good idea at the time" is
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an illusory contract
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Mei writes a check to Nat in an amount that represents half of her debt to him. On the back of the check, Mei includes the words "payment in full." Nat cashes the check. This discharges the entire debt
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if the debt is unliquidated
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XL Retail Sales, Inc., promises its salaried employees a bonus at the end of the year if management thinks it is warranted. This promise is
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unenforceable because it is not supported by consideration
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After an accident with a driver for General Transport Company (GTC), Paul signs a covenant not to sue GTC for damages in a tort action if it pays for the damage to his car. This covenant
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bars recovery only if GTC pays
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Collection of EZ Sales Company's debt to First Storage Corporation is barred by a statute of limitations. A new promise by EZ to pay the debt
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may become enforceable if payments are made
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Dag and Enita are in an auto accident. Dag offers B $2,000 if Enita promises not to pursue her potential legal claim against Dag. Enita agrees. Later, Enita discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injurt. The agreement between Dag and Enita is
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a release
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Dag and Enita are in an auto accident. Dag offers B $2,000 if Enita promises not to pursue her potential legal claim against Dag. Enita agrees. Later, Enita discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injurt. In Enita's suit against Dag to recover her repair and medical expenses, Enita will most likely recover
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nothing.
