Quiz 13: Consideration

Business

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.

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.

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)

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