Quiz 13: Consideration
Business
Q 1Q 1
American Bakeries had a fleet of over 3,000 delivery trucks. Because of the increasing cost of gasoline, the company was interested in converting the trucks to propane fuel. It signed a requirements contract with Empire Gas, in which Empire would convert "approximately 3,000" trucks to propane fuel, as American Bakeries requested, and would then sell all the required propane fuel to run the trucks. But American Bakeries changed its mind and never requested a single conversion. Empire sued for lost profits. Who won?
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Essay
The contract between A B and E is a contract for the sale of goods also known as a requirement contract. A requirement contract is a contract where one party agrees to supply goods and the other party agrees to obtain the goods exclusively from the first party. In this case the conversion of the trucks and the sale of propane gas by E was supply of the goods governed by UCC §2 306. The court affirmed that the A B had the right to decrease the estimated number of conversions of trucks. It did also have the right to decrease the conversions to zero in good faith. The circumstances should require a decrease in number of conversions and should be important. In this case A B did not offer reasons for the reduction, and hence the verdict was in favor of E Gas.
Q 2Q 2
Apply the following material to the next two questions.
Some view consideration as a technicality that allows people to make promises and then back out of them. Perhaps all promises should be enforced. In Japan, for example, promises to give gifts are enforceable without consideration.13
In the United States, if I promise to give you a gift merely because I feel like being nice, I can freely change my mind as far as contract law is concerned. A court will not make me follow through because there is no consideration.
In Japan, I would be obligated to buy the gift if all other elements of a contract were present-an offer, an acceptance, and so forth.
When it comes to giving gifts, which is better-the Japanese or American rule?
Free
Essay
When it comes to giving gifts, the Japanese rule seems better. According to Japanese rule, a person would be obligated to buy the gift if all other elements of a valid contract are present. Hence, when a person promises gift to another, it is considered a valid contract and the promisor is bound to fulfill his promise.
Q 3Q 3
For consideration to exist, there must be: (a) A bargained-for exchange
(b) A manifestation of mutual assent
(c) Genuineness of assent
(d) Substantially equal economic benefits to both parties
Free
Multiple Choice
Contracts must have a consideration for both the parties. If one side gets all the benefit and the other side gets nothing, then an agreement lacks consideration and is not an enforceable contract. There are three rules of consideration: 1. Both parties must get something of measurable value from the contract. 2. A promise to give something of value counts as consideration. 3. The two parties must have bargained for whatever was exchanged and have agreed to a deal. Therefore, the correct option is (d)
Q 4Q 4
CeCe Hylton and Edward Meztista, partners in a small advertising firm, agreed to terminate the business and split assets evenly. Meztista gave Hylton a two-page document showing assets, liabilities, and a bottom line of $35,235.67, with half due to each partner. Hylton questioned the accounting and asked to see the books. Meztista did not permit Hylton to see any records and refused to answer her phone calls. Instead, he gave her a check in the amount of $17,617.83, on which he wrote "Final payment/payment in full." Hylton cashed the check, but she wrote on it, "Under protest-cashing this check does not constitute my acceptance of this amount as payment in full." Hylton then filed suit, demanding additional monies. Meztista claimed that the parties had made an accord and satisfaction. What is the best argument for each party? Who should win?
Free
Essay
Q 5Q 5
Apply the following material to the next two questions.
Some view consideration as a technicality that allows people to make promises and then back out of them. Perhaps all promises should be enforced. In Japan, for example, promises to give gifts are enforceable without consideration.13
In the United States, if I promise to give you a gift merely because I feel like being nice, I can freely change my mind as far as contract law is concerned. A court will not make me follow through because there is no consideration.
In Japan, I would be obligated to buy the gift if all other elements of a contract were present-an offer, an acceptance, and so forth.
Are there any specific types of agreements (perhaps high-value, long-term, extremely time-consuming ones) that should definitely require consideration?
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Essay
Q 6Q 6
Which of the following requires consideration in order to be binding on the parties? (a) Modification of a contract involving the sale of real estate
(b) Modification of a sale of goods contract under the UCC
(c) Both A and B
(d) None of the above
Free
Multiple Choice
Q 7Q 7
ETHICS Melnick built a house for Gintzler, but the foundation was defective. Gintzler agreed to accept the foundation if Melnick guaranteed to make future repairs caused by the defects. Melnick agreed but later refused to make any repairs. Melnick argued that his promise to make future repairs was unsupported by consideration. Who will win the suit? Is either party acting unethically? Which one, and why?
Free
Essay
Q 8Q 8
Apply the following material to the next two questions.
Some view consideration as a technicality that allows people to make promises and then back out of them. Perhaps all promises should be enforced. In Japan, for example, promises to give gifts are enforceable without consideration.13
In the United States, if I promise to give you a gift merely because I feel like being nice, I can freely change my mind as far as contract law is concerned. A court will not make me follow through because there is no consideration.
In Japan, I would be obligated to buy the gift if all other elements of a contract were present-an offer, an acceptance, and so forth.
Albert and Luis, lifelong friends, had a tradition. Every Friday, they took turns going to the corner store and buying what they called a "package"-some vodka and a lottery ticket. One lucky Friday, Albert purchased the package, but Luis scratched off the lottery ticket, only to learn that it was a $20,000 winner. Luis refused to share. Albert sued, claiming the former friends had an enforceable contract supported by valid consideration. Rule.
Free
Essay
Q 9Q 9
Ted's wallet is as empty as his bank account, and he needs $3,500 immediately. Fortunately, he has three gold coins that he inherited from his grandfather. Each is worth $2,500, but it is Sunday, and the local rare coins store is closed. When approached, Ted's neighbor Andrea agrees to buy the first coin for $2,300. Another neighbor, Cami, agrees to buy the second for $1,100. A final neighbor, Lorne, offers "all the money I have on me"-$100-for the last coin. Desperate, Ted agrees to the proposal. Which of the deals is supported by consideration? (a) Ted's agreement with Andrea only
(b) Ted's agreements with Andrea and Cami only
(c) All three of the agreements
(d) None of the agreements
Free
Multiple Choice
Q 10Q 10
Sami walks into a restaurant. She is given a menu, which indicates that lobster is $30. Sami orders the lobster. It arrives, and Sami thinks it is very tasty. When the bill arrives, Sami tries to execute a clever ploy she learned about in her business law class. She writes a check to the restaurant for $20 and writes "full settlement" across the top. The waiter accepts the check without looking at it, and the restaurant manager later deposits it in the restaurant's bank account. Is this a liquidated or an unliquidated debt? Is Sami off the hook for the last $10?
Free
Essay
Q 11Q 11
Apply the following material to the next two questions.
Some view consideration as a technicality that allows people to make promises and then back out of them. Perhaps all promises should be enforced. In Japan, for example, promises to give gifts are enforceable without consideration.13
In the United States, if I promise to give you a gift merely because I feel like being nice, I can freely change my mind as far as contract law is concerned. A court will not make me follow through because there is no consideration.
In Japan, I would be obligated to buy the gift if all other elements of a contract were present-an offer, an acceptance, and so forth.
The consideration doctrine is controversial. Critics argue that it is a remnant of a bygone era, lacking any reasonable modern purpose and that it undermines the purpose of contract law, which is to enforce the intention of the parties to an agreement. Should consideration be abolished?
Free
Essay
Q 12Q 12
In a(n) contract, the seller guarantees to sell 100 percent of its output to one buyer, and the buyer agrees to accept the entire quantity. This kind of arrangement acceptable under the UCC. (a) output; is
(b) output; is not
(c) requirements; is
(d) requirements; is not
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Multiple Choice
Q 13Q 13
In the bleachers …
"You're a prince, George!" Mike exclaimed. "Who else would give me a ticket to the big game?"
"No one, Mike, no one."
"Let me offer my thanks. I'll buy you a beer!"
"Ah," George said. "A large beer would hit the spot right now."
"Small. Let me buy you a small beer."
"Ah, well, good enough."
Mike stood and took his wallet from his pocket. He was distressed to find a very small number of bills inside. "There's bad news, George!" he said.
"What's that?"
"I can't buy you the beer, George."
George considered that for a moment. "I'll tell you what, Mike," he said. "If you march to the concession stand right this minute and get me my beer, I won't punch you in the face."
"It's a deal!" Mike said.
Discuss the consideration issues raised by this exchange.
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Essay
Q 14Q 14
Apply the following material to the next two questions.
Some view consideration as a technicality that allows people to make promises and then back out of them. Perhaps all promises should be enforced. In Japan, for example, promises to give gifts are enforceable without consideration.13
In the United States, if I promise to give you a gift merely because I feel like being nice, I can freely change my mind as far as contract law is concerned. A court will not make me follow through because there is no consideration.
In Japan, I would be obligated to buy the gift if all other elements of a contract were present-an offer, an acceptance, and so forth.
Amber Williams and Frederick Ormsby were lovers, embroiled in a turbulent romantic relationship. After knowing each other for a short time, Frederick moved into Amber's house and paid off her $310,000 mortgage. She then gave him title to the house. But their happiness was not to last. The couple canceled their plans to marry and Amber moved out of the house. Two months later, Frederick sought reconciliation. Amber refused to get back together unless Frederick gave her half ownership of the house. Frederick agreed. After the couple split up for the last time, Amber sued for her half of the house. Frederick argued that his promise was not supported by adequate consideration. Was it?
Free
Essay
Q 15Q 15
Noncompete agreements are common features of employment contracts. Currently, courts enforce these clauses. (a) always
(b) usually
(c) rarely
(d) never
Free
Multiple Choice
Q 16Q 16
Jack Tallas came to the United States from Greece in 1914. He lived in Salt Lake City for nearly 70 years, achieving great success in insurance and real estate. During the last 14 years of his life, his friend Peter Dementas helped him with numerous personal and business chores. Two months before his death, Tallas dictated a memorandum to Dementas, in Greek, stating:PETER K. DEMENTAS is my best friend I have in this country, and since he came to the United States, he treats me like a father and I think of him as my own son. He takes me in his car grocery shopping.He drivesme to the doctor and also takesme every week to Bingham to pick up my mail, collect the rents, and manage my properties. For all the services Peter has given me all these years, I owe to him the amount of $50,000 (Fifty Thousand Dollars). I will shortly change my will to include him as my heir. Tallas signed thememorandum, but he did not in fact alter his will to includeDementas. The estate refused to pay, and Dementas sued. Was there consideration? Please rule.
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Essay