Deck 8: Consideration

Question 1

When does forbearance not constitute valid consideration?

Answer 1

A promise to refrain or refraining from doing an act is called forbearance.
If a party has the legal right to do an act, forbearance is good consideration. However, if a party makes a promise to forbear something that one has no legal right to do, the consideration is invalid.An example of good consideration is when B hits a ball through J's window. B then promises to pay J $300 if J promises to refrain from suing B. Because J has a legal right to sue B, his promise to refrain is valid consideration.
An example of invalid consideration occurs when B promises to pay J $300 if J promises to refrain from assaulting P. There is no valid consideration because J has no legal right to assault P.

Question 2

The Orleans Parish School Board employed Mary Ellen Carter as a Secretary I. Later, Carter performed the responsibilities of an Executive Secretary, then an Administrative Assistant, and finally a Software Resources Coordinator without a change in title or increase in pay. Her supervisors continuously assured her that her position and pay grade would be reclassified and that she would be paid retroactively for her greater duties. The request was submitted to the budget committee. For five years, she performed the duties and responsibilities of higher levels than her pay grade. When she was not compensated for the higher-level duties, she sued the school board. Did Carter demonstrate a case of promissory estoppel?

Answer 2

Person M sued the school board claiming that she got paid inadequately for almost five years. She must be paid for her extra work along with an interest. Her reliance was not absurd and she was a victim of bureaucracy and administrative changes.
It was a case of promissory estoppel and must be compensated for all the duties she performed with undeserving grade pay. She got a promise from school authority that she would be paid for all the work she is doing. There is a proper proof of her responsibilities and pay drawn. The discrepancy can be clearly noticed and must be compensated.

Question 3

Why are courts willing to enforce a promise to pay a voluntary subscription that lacks consideration?

Answer 3

Voluntary Subscription : is one of the exceptions to requirements consideration, even though there is no consideration for the promise, but still it is held enforceable.When any promise or pledges is made to church or any charitable enterprises to finance them, Then such promise or pledge is enforceable and creates binding on the individual.
Court enforces a promise to pay a voluntary subscription even though it lacks consideration. There are two theories behind it, firstly subscribers promise is attached o the promise made by other subscribers. Second theory is subscription forms a unilateral that charitable enterprises accepts and creates any liability or makes any expenses in future, on the basis of promise or pledge.

Question 4

Willamette Management Associates Inc. contracted to perform extensive accounting services involving Kimberly Palczynski's husband's business interests in connection with a marital case between the couple. The contract required Palczynski to pay any outstanding fees to Willamette before its principal, Alan Schachter, would be asked to testify in court. Right before trial, Palczynski owed Willamette $67,000. Schachter urged Palczynski to make a payment arrangement because he thought his testimony would be very helpful to her. The parties signed a second agreement requiring Willamette to continue to perform the same work for $57,000, to be paid in monthly installments by Palczynski. She made no payments, so Willamette sued her. Willamette argued that the second agreement was unsupported by consideration and thus the court should enforce the first agreement. Should it?

Question 5

Why is consideration unnecessary to support an obligation of record?

Question 6

What is consideration? Explain.

Question 7

When will courts apply the doctrine of promissory estoppel?

Question 8

Success Management Team Inc. (Success) and Town Country Real Estate Inc. (Town) agreed that Success would sell stock and a Coldwell Banker franchise to Town for $40,000. Town paid Success $20,000 with the agreement and signed a note for $20,000. Success later sued Town on the note. Town's lawyer sent Success's lawyer a check for $18,500 with a letter saying that Town had incurred $1,500 in attorney's fees because of Success's failure to transfer the Coldwell franchise timely. The check was deposited in Success's attorney's escrow account. Success's attorney replied that Town could not set off disputed damages (the attorney's fees) against the promised amount ($20,000). He continued that Town owed interest and attorney's fees for breaching the note and contract, but Success would accept $25,000. Town argued that by keeping the money, Success had cancelled the debt. Had it?

Question 9

When does a promise constitute consideration?

Question 10

John and Lori Finstad granted Ransom-Sargent Water Users an option to purchase their farmland and drill water wells. The option also permitted the Finstad's to lease the property for up to ten years, provided they only use the land for pasture purposes. Four years later, Ransom-Sargent terminated the Finstad's lease rights, because the Finstad's had tilled up some of the land. In order to continue receiving government farm payments, the Finstad's signed a new contract with Ransom-Sargent permitting the Finstad's to lease the land for one year and to collect government payments for that year. By signing the contract, they also avoided a lawsuit with Ransom-Sargent. The contract included a release of all rights the Finstad's had to lease the property under the original option agreement. The following year, Ransom-Sargent accepted bids to lease the land. After they were not awarded the lease, the Finstad's sued Ramson-Sargent, alleging that their second contract was not supported by consideration and that their original option to lease should be upheld. Were they correct?

Question 11

Generally, why is the law not concerned with the adequacy of consideration?

Question 12

Brian Center Nursing Care/Austell Inc. leased five nursing homes from William Foster. The leases expired, and Brian kept possession of the nursing homes while it negotiated a new lease with Foster. No new lease was agreed upon, and Foster leased the homes to another company. Brian would not give up possession, so Foster sued. Brian alleged Foster had promised that the terms of the lease would continue as long as Brian paid the rent and continued to negotiate. Brian claimed it had been injured by relying on this promise, because it had continued to occupy the premises, pay the rent, and negotiate for a new lease. Did promissory estoppel apply to these facts?

Question 13

George agrees to remodel a kitchen for Harry for $30,000, but after beginning work he asks Harry to pay $34,000. Can George enforce Harry's new promise to pay $34,000?

Question 14

Star Valley Ranch Association managed a subdivision. When Vince Zimmer resigned as general manager, he requested payment for unpaid overtime. The board of the association denied the request. The board later discovered that through clerical error, Zimmer had been overpaid and demanded he repay $1,380. Zimmer responded by demanding $2,483 for unpaid overtime. Because the legal costs of pursuing collection were not worth the amount in dispute, Zimmer and the association signed a settlement mutually releasing each other from the claims. Ronald Mueller owned a lot in the subdivision and sued, alleging that Zimmer's claim for overtime was without merit so that by settling the former directors and general managers deprived the association of funds to which it was entitled. Was the settlement agreement valid?

Question 15

When can partial payment of a past-due debt constitute consideration to support the creditor's promise to cancel the balance of the debt?

Question 16

R. Gary Schreiber and Robert Schreiber signed a bill of sale for the intellectual property rights in the recorded media of Robert Knievel's stunt performances. The Schreibers stated that they paid off Knievel's motor bus in exchange for the film rights. However, the payoff for the bus occurred weeks before the bill of sale was executed, and Knievel already had the bus in his possession. Twenty-five years after the bill of sale was executed and after Knievel's death, the Schreibers sued Kneivel's estate to obtain a declaration of the ownership rights in the intellectual property. Was there sufficient consideration to support the contract?

Question 17

If a friend gratuitously helps do yard work one weekend with no promise to pay, can he then enforce a promise to pay made the following week after the work is done?

Question 18

Anthony and Philip Conway were the founders of a publicly traded medical device company called Rochester Medical Corporation (RMC). C.R. Bard Inc. negotiated to purchase RMC, but prior to closing the transaction, C.R. Bard's board required the Conways to each sign a separate five-year non-compete agreement. After the Conways executed the non-compete agreements, C.R. Bard paid shareholders a significant premium for their shares of RMC. The Conways received close to $40 million from the sale. However, shortly after the sale, the Conways regretted signing the non-compete agreements and filed a lawsuit stating that the agreements were invalid for lack of consideration. Were they correct?