Question 1

Discuss the concept of adequacy of consideration.

Accepted Answer

The answer of Discuss the concept of adequacy of consideration....

Question 2

Harold purchased 400 pairs of gloves from Isaac at a contract price of $800.Fifty of the gloves were defective and a dispute arose as to the amount due and owing under the contract.Harold refuses to pay the $800, and Isaac is threatening to sue.Which of the following is correct with regard to this transaction?

Accepted Answer

If Isaac agrees to accept $600 to settle the dispute and Harold agrees to pay that amount, the agreement is enforceable as a settlement of a disputed claim.

Question 3

In DiLorenzo v.Valve & Primer Corporation , the court held:

Accepted Answer

The court held that there was no consideration for the stock option, and promissory estoppel did not apply because detrimental reliance was not proven.

Question 4

There are certain transactions that are enforceable without consideration.These include:

Accepted Answer

All of these transactions are enforceable without consideration. A) involves a moral obligation and a new promise to pay a debt that is no longer legally enforceable due to the statute of limitations. B) involves a promise to pay a debt discharged in bankruptcy, which can be enforceable if it meets certain legal requirements. C) involves a new promise to perform an obligation that was previously voidable but has not been avoided, which can also be enforceable without consideration.

Question 5

In a contract for the sale of lawn care services, an issue arises about whether the homeowner would receive disproportionately less in service than the lawn care company would receive in compensation.This disparity may be relevant to the:

Accepted Answer

The disparity in the exchange may be relevant to defenses and remedies, such as unconscionability, which addresses situations where one party receives disproportionately less than the other.

Question 6

Aunt Ellie promises her 21-year-old nephew, Robbie, that she will pay him $100 if he quits smoking for a month.If Robbie does, is there a binding contract?

Accepted Answer

By quitting smoking, Robbie is giving up his legal right to smoke. This constitutes consideration, which is necessary for a binding contract. Therefore, there is a binding contract between Robbie and Aunt Ellie.

Question 7

Alice says to Brian, "If I decide to buy a digital camera next year, I will buy it from you." This is an example of:

Accepted Answer

An illusory promise is a statement that appears to assure a commitment or guarantee something but upon closer inspection, does not actually bind the party to any obligation or course of action. In this case, Alice's statement does not commit her to buying a camera; it merely states a conditional intention dependent on her future decision, making it an illusory promise.

Question 8

Define consideration.

Accepted Answer

The answer of Define consideration....

Question 9

Mary agrees to sew Georgia's prom dress for $50 plus costs.Georgia decides that she wants ruffles around the neck and calls Mary who says it will now cost $60.When Mary finishes the dress (with ruffles), Georgia must pay:

Accepted Answer

The modified agreement of $60 is supported by additional consideration, as Georgia requested ruffles on the dress. Therefore, Georgia must pay the agreed-upon price of $60 for the dress with ruffles.

Question 10

Which of the following are the two basic elements to consideration?

Accepted Answer

The two basic elements to consideration are a bargained-for exchange (both parties giving something of value) and legal sufficiency (the exchange being legal and not being against public policy). Choice B is close but legal detriment and legal benefit are not the two basic elements, they are the components of legal sufficiency. Choice C is incorrect because legal adequacy is not a commonly used term in contract law. Choice D is incorrect because promise and forbearance are both examples of consideration but not the two basic elements.

Question 11

a.How does Article 2 of the UCC modify the common law of contracts with regard to consideration? 
b.Explain how output and requirements contracts differ from illusory promises.

Accepted Answer

The answer of a.How does Article 2 of the UCC...

Question 12

William agrees to drill a well up to 200-feet deep for John's rural cabin.The contract price is $3,000.After drilling 100 feet, William strikes solid granite rock.He talks to John and explains that this is highly unusual for the area and could not have been anticipated at the time of entering into the contract.He offers to get a special drill, but says it will cost him more money, so that he will be unable to complete the project for the agreed price.Because John is anxious to have the well, he agrees to pay William an additional $1,000 to complete the job.However, once the well is finished, he changes his mind and now says he will pay only the originally agreed-upon amount.What is the result?

Accepted Answer

The parties have entered into a substitute contract which discharges the original contract. John agreed to pay an additional $1,000 for the completion of the well. Once both parties agreed on a new price, the original contract was discharged and the new contract became binding. Therefore, John is obligated to pay the additional $1,000.

Question 13

Sam owes $5,000 to the First National Bank for a student loan which will come due on January 1 next year.He has been offered a two-year graduate fellowship, but he will not be able to pay the loan back if he accepts the fellowship.The bank manager tells Sam that if he pays $3,000 now, they will forgive the loan.Should Sam accept the offer?

Accepted Answer

By paying $3,000 now, Sam is providing consideration to the bank. Consideration is what makes a promise binding. Therefore, the bank's promise to forgive the remaining $2,000 is binding. Option A is incorrect as the bank is offering to forgive the entire loan, not just a portion of it. Option B is incorrect as the bank manager is an authorized representative of the bank and can bind the bank to his promises. Option D is incorrect as the bank cannot be forced to do anything outside the terms of the agreement, even by a manager.

Question 14

Nancy, who lives in Birdville, wants to open a McHenry Roast Chicken franchise.Mark, a representative of McHenry, told Nancy, "If you will buy a lot and build a building in River City, we will give you a franchise." Nancy bought the lot and built the building as instructed only to discover that McHenry had awarded the franchise to a large corporation.McHenry claims no liability to Nancy since there was no consideration.Which statement best describes the situation?

Accepted Answer

McHenry made a promise to Nancy, which she relied on by purchasing a lot and building a building. McHenry should be held liable for Nancy's detrimental reliance on their promise, even though there was no consideration involved. This situation falls under the concept of promissory estoppel, which prevents a party from going back on their promise and causing harm to the other party.

Question 15

Which of the following is correct with regard to consideration?

Accepted Answer

A and B are correct. In a unilateral contract, a promise is indeed exchanged for an act or forbearance to act, and in a bilateral contract, there is an exchange of promises between the parties. Legal sufficiency of consideration does not necessarily equate to its adequacy, making C incorrect.

Question 16

Roberto obtains an exclusive franchise to sell widgets for the Acme Widget Company.The exclusive franchise covers the entire State of Wisconsin for a period of three years.In this case:

Accepted Answer

A and B are correct. Under common law principles related to exclusive dealing contracts, the manufacturer (Acme Widget Company) has an implied obligation to use its best efforts to supply the goods, even if this is not explicitly stated in the contract. Similarly, the grantee of the exclusive franchise (Roberto) has an implied obligation to use his best efforts to promote and sell the widgets. These obligations are implied to ensure that both parties benefit from the exclusive arrangement and to prevent one party from undermining the agreement's purpose. Choice C is incorrect because, under the Uniform Commercial Code (UCC), an exclusive dealing contract does provide consideration due to the mutual obligations and benefits it creates for both parties.

Question 17

Herb promises to give his nephew, Curt, his old TV when the new one he ordered arrives.Explain whether this promise is enforceable, and include in your discussion the concept of "bargained-for exchange."

Accepted Answer

The answer of Herb promises to give his nephew, Curt,...

Question 18

Marilyn contracted with Bravo Builders to build an addition to her house for $15,000.After digging the foundation, Bravo decides that it will take more work and more concrete than it had originally thought and that it will need to charge an additional $5,000 for the job.Assuming Marilyn agrees, which of the following is correct?

Accepted Answer

This is a modification of a preexisting contract, which under common law must be supported by additional consideration on the part of Bravo Builders. In this case, Bravo Builders is asking for an additional $5,000 above the original agreed-upon price of $15,000. Since there is no new consideration provided by Marilyn, Bravo Builders must rely on the concept of "preexisting duty" which states that if a party is already obligated under a contract to perform a certain duty, then doing that duty cannot be considered as valid consideration for a new agreement. Therefore, the modification of the contract requires additional consideration.

Question 19

Andrew agrees to paint Rosalene's house for $500.Two days after he starts the job, he decides that $500 isn't enough money.He refuses to finish the job, unless Rosalene agrees to pay him $100 more.What principle applies to this fact situation?

Accepted Answer

Andrew was already obligated to paint the house for the agreed-upon amount of $500. He did not provide any additional consideration for Rosalene's promise to pay him $100 more. Therefore, the principle of pre-existing duty applies, meaning that a party cannot demand additional payment for performing a pre-existing duty without providing additional consideration.

Question 20

Orwin, owner of a used furniture store, gives Maggie a signed offer to buy her living room furniture for $800.This offer:

Accepted Answer

The answer of Orwin, owner of a used furniture store,...

Quiz 12: Consideration