Question 1

An assignment can only be created by an intentional act of the assignor.

Accepted Answer

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Question 2

Zeta Corp was contractually obliged to pay $25 000 cash to Omega Inc on June 15th. On June 1st, Omega agreed to discharge the entire debt if Zeta immediately gave a cheque worth $15 000. Zeta did so. Nevertheless, on June 15th, Omega demanded payment of another $10 000. It is entitled to receive that amount.

Accepted Answer

Omega Inc agreed to discharge the entire debt in exchange for the immediate payment of $15,000, which Zeta Corp fulfilled. Therefore, Omega Inc is not entitled to demand the remaining $10,000.

Question 3

Betta Corp, a manufacturer, sold widgets to Splendens Inc, a wholesaler. Under the terms of that agreement, Splendens was entitled to re- sell the widgets to a retailer, but only if its contract with the retailer: (i) required the retailer to sell the widgets to its own customers at a list price established by Betta, and (ii) required the retailer to pay $500 to Betta for every widget that it sold to a customer at a price that was below the list price established by Betta. Splendens in fact sold the widgets to Siamese Fish Ltd, a retailer. Siamese then sold ten of the widgets to its own customers for less than Betta's list price. Is Siamese required to pay $5000 to either Betta or Splendens? Explain your answer.

Accepted Answer

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Question 4

The doctrine of promissory estoppel operates only if the representee relies upon a statement made by the representor.

Accepted Answer

The doctrine of promissory estoppel requires that the representee must have relied on a statement or promise made by the representor in order for the doctrine to apply. Without such reliance, the doctrine would not come into play. Therefore, the statement is true.

Question 5

What is the essential purpose of a seal?

Accepted Answer

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Question 6

Alpha Corp entered into an agreement with Beta Inc. Alpha promised to transfer certain equipment to Beta and Beta promised to pay $50 000 to Gamma Ltd. Alpha has provided sufficient consideration but Beta has not.

Accepted Answer

A contract requires consideration from both parties. In this case, Beta has not provided consideration, therefore the agreement is not valid.

Question 7

A statutory assignment involves three parties: the assignor, the assignee, and the debtor.

Accepted Answer

A statutory assignment involves the transfer of a legal right from the assignor to the assignee, and the debtor is notified of the transfer.

Question 8

"A trust does not provide a true exception to the privity of contract doctrine. The contract is enforced by the person to whom the contractual promise was given." Explain the meaning of that statement and indicate whether or not it is true.

Accepted Answer

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Question 9

The Canadian government announced its plan to create and circulate a new $100 bill. Because Marta knew that Bernie was an avid collector of currency, she promised to give him the first new
$100 bill that she received from her work at a flea market. The agreement was placed in writing and Bernie applied his seal to the document. Shortly after the government released the new $100 bills, Marta received one from a customer at the flea market. She is required to deliver it to Bernie.

Accepted Answer

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Question 10

Past consideration never satisfies the requirement of mutuality of consideration.

Accepted Answer

Past consideration refers to an act or benefit given before a promise is made, and it does not count as valid consideration for a new contract because it was not given in exchange for the promise.

Question 11

A promise to perform a pre- existing contractual obligation cannot provide consideration under a new contract with the same party. That rule always reflects commercial reality.

Accepted Answer

A promise to perform a pre-existing contractual obligation does not provide consideration under a new contract with the same party, unless there is some additional consideration or modification to the original contract. However, there are some exceptions to this rule such as where the pre-existing obligation is subject to a dispute or the performance of the obligation is in doubt.

Question 12

"Depending upon the circumstances, a promise to pay a specific sum of money may or may not be enforceable if that promise is given in response to services that have already been received." Explain whether or not that statement is accurate.

Accepted Answer

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Question 13

Epsilon Inc and Delta Ltd entered into an agreement. Epsilon promised to pay $10 000 to Delta in March. Delta promised to deliver a piece of machinery to Epsilon in June. Epsilon paid the money in March. It is now April. The parties do not yet have a contract because while Delta has given a promise, it has not yet performed that promise.

Accepted Answer

The parties do have a contract, as both parties exchanged promises to perform. Delta's promise to deliver the machinery constitutes consideration for Epsilon's promise to pay the money. The fact that Delta has not yet performed its promise does not negate the existence of the contract.

Question 14

As a wedding anniversary present for himself and his wife, Louisa, Mario entered into an agreement with Stanislaus, a world famous pianist. Under the terms of that agreement, Mario promised to pay Stanislaus $52 000. Stanislaus promised that he would provide weekly lessons for one year for both Mario and Louisa. After two weeks of lessons, Mario completely lost interest, but Louisa is eager to continue. Stanislaus, however, refuses to go on. Louisa has the right to demand the remainder of the lessons from Stanislaus because the courts generally assume that if one party (such as Mario) enters into a contract for another person (such as Louisa), the promise provided by the other contractual party (such as Stanislaus) is held on trust.

Accepted Answer

The right to enforce a contract generally lies with the parties involved in the contract. Since Louisa was not a party to the contract between Mario and Stanislaus, she typically would not have the right to demand performance unless the contract explicitly stated she was a beneficiary or had rights under it.

Question 15

Luke threatened to sue Leia for $50 000 unless she immediately paid $30 000 to him. Leia paid $30 000 as requested. Luke is entitled to keep that money even if Leia later proves that he never honestly believed in the validity of the lawsuit that he threatened.

Accepted Answer

The answer of Luke threatened to sue Leia for $50...

Question 16

A gratuitous promise is never enforceable.

Accepted Answer

A gratuitous promise can be enforceable if it is made in a deed or supported by consideration, or if it has induced reliance to the detriment of the promisee, under the doctrine of promissory estoppel.

Question 17

Hofflehass Architectural Ltd was hoping to persuade the Town of Buchanan to create a new beachfront resort. Buchanan said that it was not yet willing to commit itself to such a project. However, it also said that it would likely agree to any proposal that met certain specifications. On that basis, Hofflehass spent $150 000 in creating a proposal that met all of the town's specifications. It presented the proposal and further explained that it would charge $2 000 000 to actually undertake the construction project. The town's officials, however, said that they were no longer interested in a beachfront resort. Although Hofflehass cannot force Buchanan to pay it $2 000 000 to create the proposed resort, it can use the doctrine of promissory estoppel to recover its expenses of
$150 000.

Accepted Answer

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Question 18

Sebastien Johan is a music critic known for his ill- tempered manner. In a recent newspaper article, he harshly criticized a classical recording that was released shortly after the death of Glenn Klavier, its featured performer. Johan's review attacked Klavier's music, which was not unusual. However, the review also attacked Klavier personally. It unfairly and inaccurately suggested that Klavier had intentionally stolen all of his ideas from another pianist. Klavier's widow sued Johan under the tort of defamation on the basis that the review tended to make people think less of her late husband. She threatened to sue for $500 000 unless she immediately received payment of $100 000. Although Johan normally would have simply ignored the matter, he recently had experienced a number of financial setbacks. He therefore realized that while he would prefer to pay nothing, he could afford $100 000, but would be ruined if he was ever required to pay $500 000. He therefore promised to pay $100 000 within one year to Klavier's widow in exchange for her promise to drop the lawsuit. Six months later, however, Klavier's widow was reliably informed that her lawsuit certainly would have failed if it had been brought before a judge. The law of defamation states that a person cannot be held liable for making derogatory comments about a dead person. Johan therefore now refuses to fulfill his promise to pay $100 000. Is he entitled to do so? Explain your answer.

Accepted Answer

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Question 19

Dina threatened to sue Chris for $25 000 unless he immediately paid her $10 000. Chris paid $10
000. He will be entitled to recover that money as long as he later proves to Dina that her initial belief was mistaken and that she never did have a right to sue him for $25 000.

Accepted Answer

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Question 20

Tracey is a police officer. While she was on vacation, she agreed to act as a security guard at a concert in exchange for payment of $500. She performed the work, but the concert promoter refuses to pay her. He is entitled to do so because the law wants to discourage public servants like Tracey from improperly taking advantage of their special skills for private gains.

Accepted Answer

This statement is incorrect. Although there may be rules or regulations regarding conflicts of interest for public servants like police officers, it is not accurate to say that the law prohibits them from using their skills for private gain in all circumstances. In fact, many police officers work off-duty as security guards or in other roles to earn extra income. If Tracey performed the work as agreed, she is entitled to payment and may have legal options to recover the money owed to her.

Quiz 8: Consideration and Privity