Business Law Today Study Set 1

Business

Quiz 9 :

Agreement and Consideration

Quiz 9 :

Agreement and Consideration

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A Question of Ethics. John Sasson and Emily Springer met in January 2002. John worked for the U.S. Army as an engineer. Emily was an attorney with a law firm. When, six nzonths later, John bought a townhouse in Randolph, New Jersey, he asked Emily to live with him. She agreed, but retained the ownership of her borne in Monmouth Beach. John paid the mortgage and the other expenses on the townhouse. He urged Emily to quit her job and work fronz "our house." In May 2003, Emily took John's advice and started her own law practice. In December, John made her the beneficiary of his $150,000 individual retirement account (IRA) and said that he would give her his 2002 BMW M3 car before the end of the next year. He proposed to her in September 2004, giving her a. diamond engagement ring and promising to "take care of her" for the rest of her life. Less than a month later, John was critically injured by an accidental blow to his head during a basketball game and died. On behalf of John's estate, which was valued at $1.1 million, his brother Steven filed a complaint in a New Jersey state court to have Emily evicted from the town-house. Given these facts, consider the following questions. (In re Estate of Sasson, 387 N.J.Super. 459, 904 A.2d 769 (App.Div. 2006)] 1. Based on John's promise to "take care of her" for the rest of her life, Emily claimed that she was entitled to the townhouse, the BMW, and an additional portion of John's estate. Under what circumstances would such a promise constitute a valid, enforceable contract? Does John's promise meet these requirements? Why or why not? 2. Whether or not John's promise is legally binding, is there an ethical basis on which it should be enforced? Is there an ethical basis for not enforcing it? Are there any circumstances under which a promise of support should be-or should not be-enforced? Discuss.
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(a)A promise constitute a valid, enforceable contract if
• the parties had co-habitated;
• they are in a marriage-type relationship;
• during the period of cohabitation, the defendant had promised the plaintiff to support him/her for lifetime; and
• the promise was made in exchange for a valid consideration.
Yes, the defendant's promise meets all these requirements. The parties had been co-habitating for over two years. Facts provide that the parties were having a marriage-type relationship. The defendant had proposed the plaintiff a month before his death. The plaintiff had claimed that the defendant had promised her to take care of her for rest of her life. In exchange he asked her to quit her job and start practicing law from home only so that they can spend much time together.
Thus, given the facts, all the elements have been satisfied to form a valid, enforceable contract between the parties.
(b)No, there is no ethical reason for which the promise should be enforced.
The plaintiff was not at all left destitute. Apart from an IRA assigned to her by the defendant, she owned her condominium in Monmouth Beach. Moreover, she was practicing lawyer that would enable her to support herself. The plaintiff may claim that she gave up her associate position in a law firm while living with the defendant. However, she gave up that position to spend more time with the defendant and not as a condition having the relationship continuously.
Further, almost all her expenses were met by the defendant. Thus, she cannot claim the loss of income suffered by leaving her position at law firm. There does not appear any significant reliance by the plaintiff on the defendant's promise of lifelong support.
There are no circumstances under which such a promise shall be enforced. Although the plaintiff suffered a huge loss due to defendant's death, that loss cannot be retrieved by an awarding palimony.

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Offer and Acceptance. Carrie offered to sell a set of legal encyclopedias to Antonio for $300. Antonio said that he would think about her offer and let her know his decision the next day. Norvel, who had overheard the conversation between Carrie and Antonio, said to Carrie, "I accept your offer" and gave her $300. Carrie gave Norvel the books. The next day, Antonio, who had no idea that Carrie had already sold the books to Norvel, told Carrie that he accepted her offer. Has Carrie breached a valid contract with Antonio? Explain.
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C made a promise to sell the books in the future on the payment of $300. There was no contract formation and the parties did not discuss any terms or conditions.
An acceptance requires an offer to be made and the subsequent acceptance for it. In the present case though Carrie had made an offer for the same Antonio did not promptly accept the offer. Carrie selling the books to Norvel thus did not breach any contract.

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Question with Sample Answer-Acceptances. Chernek, the sole owner of a small business, has a large piece of used farm equipment for sale. He offers to sell the equipment to Bollow for $10,000. Discuss the legal effects of the following events on the offer. 1. Chernek dies prior to Bollow's acceptance, and at the time she accepts, Bollow is unaware of Chernek's death. 2. The night before Bollow accepts, a fire destroys the equipment. 3. Bollow pays $100 for a thirty-day option to purchase the equipment. During this period, Chernek dies, and Bollow accepts the offer, knowing of Chernek's death. 4. Bollow pays $100 for a thirty-day option to purchase the equipment. During this period, Bollow dies, and Bollow's estate accepts Chernek's offer within the stipulated time period.
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(a)If either the offeror or the offeree dies prior to the acceptance, a revocable offer is automatically terminated. Since the offer is personal to the parties involved, it cannot be transferred on to others, not even to the deceased's estate. However, this rule applicable even if the other party is not aware of the death.
Thus, Mr. S's offer would be terminated upon his death and Mr. B's acceptance after the death does not form a contract.
(b)An offer gets terminated if the specific subject matter is destroyed before the offer is accepted. Thus, Mr. B's acceptance after the fire broke out does not form a contract.
(c)Given an option contract, and irrevocable offer, the offeror's death does not terminate the option contract. The offeree can still accept the offer to sell the equipment where the offeror's estate would be bound to perform. Since the estate can transfer title to the equipment. The performance was not personal to Mr. S. Knowing about the death of the offeror does not constitute a material fact to the offeree's acceptance right.
Thus, Mr. B can hold the estate liable to a contract for the purchase of the equipment.
(d)Given an option contract, and irrevocable offer, the offeree's death also does not terminate the offer. The option is an individual contract. The survival of the contract causes it to be passed on to the offeree's estate. The estate, therefore, can exercise the option by acceptance within the specified period.
Thus, Mr. B's estate's acceptance would bind Mr. S to a contract for the sale of the equipment.

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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. In what circumstances will an offer be irrevocable?
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Video Question. Co to this text's Web site at www. thomsonedu.com/westbuslairaft and select "Chapter 9. Click on "Video Questions" and view the video titled Offer and Acceptance. Then answer the following questions. 1. On the video, Vinny indicates that he can't sell his car to Oscar for four thousand dollars; then he says, "maybe five...." Discuss whether Vinny has made an offer or a counteroffer. 2. Oscar then says to Vinny, "Okay, I'll take it. But you gotta let me pay you four thousand now and the other thousand in two weeks." According to the chapter, do Oscar and Vinny have an agreement? Why or why not? 3. When Maria later says to Vinny, "I'll take it," has she accepted an offer? Why or why not?
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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. What is consideration? What is required for consideration to be legally sufficient?
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Question with Sample Answer-Past Consideration. Daniel, a recent college graduate, is on his way home for the Christmas holidays from his new job. He gets caught in a snowstorm and is taken in by an elderly couple who provide him with food and shelter. After the snowplows have cleared the road, Daniel proceeds home. Daniel's father, Fred, is most appreciative of the elderly couple's action and in a letter promises to pay them $500. The elderly couple, in need of funds, accept Fred's offer. Then, because of a dispute with Daniel, Fred refuses to pay the elderly couple the $500. Discuss whether the couple can hold Fred liable in contract for the services rendered to Daniel.
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Case Problem with Sample Answer. As a child, Martha Carr once visited her mother's 108-acre tract of unimproved land in Richland County, South Carolina. In 1968, Betty and Raymond Campbell leased the land. Can, a resident of New York, was diagnosed as having schizophrenia and depression in 1986, was hospitalized five or six times, and takes prescrip-tion drugs for the illnesses. In 1996, Carr inherited the Richland property and, two years later, contacted the Campbells about selling the land. Can asked Betty about the value of the land, and Betty said that the county tax assessor had determined that the land's agricultural value was $54,000. The Campbells, knew at the time that the county had assessed the total property value at $103,700 for tax purposes. On August 6, Carr signed a contract to sell the land to the Campbells for $54,000. Believing the price to be unfair, how-ever, Carr did not deliver the deed. The Campbells filed a suit in a South Carolina state court against Carr, seeking specific performance of the contract. At trial, an expert real estate appraiser testified that the real market value of the property was $162,000 at the time of the contract. Under what circumstances will a court examine the adequacy of consideration? Are those circumstances present in this case? Should the court enforce the contract between Can and the Campbells? Explain. [Campbell v. Cam 361 S,C. 258, 603 S.E.2d 625 (2004)]
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Agreement and Consideration Shane Durbin wanted to have a recording studio custom built in his home. He sent invitations to a number of local contractors to submit bids on the project. Rory Amstel submitted the lowest bid, which was $20,000 less than any of the other bids Durbin received. Durbin then called Amstel to ascertain the type and quality of the materials that were included in the bid and to find out if he could substitute a superior brand of acoustic tiles for the same bid price. Amstel said he would have to check into the price difference. The parties also discussed a possible start date for construction. Two weeks later, Durbin changed his mind and decided not to go forward with his plan to build a recording studio. Amstel filed a suit against Durbin for breach of contract. Using the information presented in the chapter, answer the following questions. 1. Did Amstel's bid meet the requirements of an offer? Explain. 2. Was there an acceptance of the offer? Why or why not? 3. Suppose that the court determines that the parties did not reach an agreement. Further suppose that Amstel, in anticipation of building Durbin's studio, had purchased materials and refused other jobs so that he would have time in his schedule for Durbin's project. Under what theory discussed in the chapter might Amstel attempt to recover these costs? 4. Now suppose that Durbin had gone forward with his plan to build the studio and immediately accepted Amstel's bid without discussing the type or quality of materials. After Amstel began construction, Durbin asked Amstel to substitute a superior brand of acoustic tiles for the tiles that Amstel had intended to use at the time that he bid on the project. Amstel installed the tiles, then asked Durbin to pay the difference in price, but Durbin refused. Can Amstel sue to obtain the price differential from Durbin in this situation? Why or why not? Answers for the even-numbered questions in this For Review section can be found in Appendix E at the end of this text.
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Offer. In August 2000, in California, Terry Reigelsperger sought treatment for pain in his lower back from chiropractor James Siller. Reigelsperger felt better after the treatment and did not intend to return for more, although he did not mention this to Siller. Before leaving the office, Reigelsperger signed an "informed consent' form that read, in part, "I intend this consent form to cover the entire course of treatment for my present condition and for any future condition(s) for which I seek treatment." He also signed an agreement that required the parties to submit to arbitration "any dispute as to medical malpractice...This agreement is intended to bind the patient and the health care provider... who now or in the future treat[s] the patient." Two years later, Reigelsperger sought treatment from Siller for a different condition relating to his cervical spine and shoulder. Claiming malpractice with respect to the second treatment, Reigelsperger filed a suit in a California state court against Siller. Siller asked the court to order the submission of the dispute to arbitration. Does Reigelsperger's lack of intent to return to Siller after his first treatment affect the enforceability of the arbitration agreement and consent form? Why or why not? [Reigelsperger v. Siller, 40 Ca1.4th 574, 53 Cal.Rptr.3d 887, 150 P.3d 764 (2007)]
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Agreement In 2000, David and Sandra Harless leased 2.3 acres of real property at 2801 River Road S.E. in Winnabow, North Carolina, to their son-in-law and daughter, Tony and Jeanie Connor. The Connors planned to operate a "general store/variety store" on the premises. They agreed to lease the property for sixty months with an option to renew for an additional sixty months. The lease included an option to buy the property for "fair market value at the time of such purchase (based on at least two appraisals)." In March 2003, Tony told David that the Connors wanted to buy the property. In May, Tony gave David an appraisal that estimated the property's value at $140,000. In July, the Connors presented a second appraisal that put the value at $160,000. The Connors offered $1 50,000. The Harlesses replied that "under no circumstances would they ever agree to sell their old store building and approximately 2.5 acres to their daughter... and their son-in-law." The Connors filed a suit in a North Carolina state court against the Harlesses, alleging breach of contract. Did these parties have a contract to sell the property? If so, what were its terms? If not, why not? [Connor v. Harless, 176 N.C.App. 402, 626 S.E.2d 755 (2006)]
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Critical Legal Thinking. Under what circumstances should courts examine the adequacy of consideration?
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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. What are the elements that are necessary for an effective acceptance?
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Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text. In what circumstances might a promise be enforced despite a lack of consideration?
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Agreement. Ball writes to Sullivan and inquires how much Sullivan is asking for a specific forty-acre tract of land Sullivan owns. Ball then receives a letter from Sullivan stating, "I will not take less than $60,000 for the forty-acre tract as specified." Ball immediately sends Sullivan a fax stating, "I accept your offer for $60,000 for the forty-acre tract as specified." Discuss whether Ball can hold Sullivan to a contract for sale of the land.
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Thomson The following multiple-choice question is representative of the types of questions available in one of the four sections of CANI ThomsonNOW for Business Law Today. ThomsonNOW also provides feedback for each response option, whether correct or incorrect, and refers to the location within the chapter where the correct answer can be found. In the interests of fairness and equity, the courts may allow an exception to the preexisting duty rule when a. the consideration given for a contract is past consideration. b. the promise is illusory. c. the consideration is inadequate. d. contract performance involves unforeseen difficulties.
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What elements are necessary for an effective offer? What are some examples of non-offers?
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Intention. Music that is distributed on compact discs and similar media generates income in the form of "mechanical" royalties. Music that is publicly performed, such as when a song is played on the radio, included in a movie or commercial,. or sampled in another song, produces "performance" royalties. Both types of royalties are divided between the songwriter and the song's publisher. Vincent Cusano is a musician and songwriter who performed under the name "Vinnie Vincent" as a guitarist with the group KISS in the early 1980s. Cusano co-wrote three songs entitled "Killer," "I Love It Loud," and "I Still Love You: which KISS recorded and released in 1982 on an album tided Creatures of the Night. Cusano left KISS in 1984. Eight years later, Cusano sold to Horipro Entertainment Group "one hundred (100%) percent undivided interest" of his rights in the songs "other than Songwriter's share of performance. income." Later, Cusano filed a suit in a federal district court against Horipro, claiming in part that he never intended to sell the writer's share of the mechanical royalties. Horipro filed a motion for summary judgment. Should the court grant the motion? Explain. [Cusano v. Horipro Entertainment Group, 301 F.Supp.2c1 272 (S.D.N.Y. 2004)]
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