Chapter 12, Exam III

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Ida promises to pay Jon, her son, $15,000 if he obtains his degree at Kappa University, where he is currently in his second hear. Jon graduates. Ida is

required to pay, because Jon obtained a degree at Kappa

Rollo promises to perform, for a price, shoe repair services in affiliation with Tog 'n Things, a clothing store. To support a contract, the consideration exchanged by the parties must be

legally sufficient

Dave's Hobby Town and Eva's Yarn Shoppe are adjacent stores with adjoining parking lots. Dave offers Eva a discount on purchases from Dave's store if Eva will not tow the cars of Dave's customers who park in Eva's lot

Dave's discount is legally sufficient consideration

because it is a promise of something of value

Dave's Hobby Town and Eva's Yarn Shoppe are adjacent stores with adjoining parking lots. Dave offers Eva a discount on purchases from Dave's store if Eva will not tow the cars of Dave's customers who park in Eva's lot

Eva's forbearance from towing is legally sufficient consideration

because it is a promise of something of value

Axel, the owner of Bar-B-Q Cafe, announces that he plans to paint its front fluorescent red. Cleo, the owner of Delicate Dress Shop next door, promises to pay Axel $1,000 to use a more conservative color. Axel agrees. Cleo's promise is

enforceable, because Axel agreed to refrain from doing something that he was legally entitled to do

Jill promises to pay Kyle $500 because "he does not have as much money as other people." Jill's promise is

not enforceable because Kyle has not given consideration in return

Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal - a student loan accruing interest at a certain rate and payable beginning on a certain date - was unfair because the consideration for their contract was inadequate

A court is most likely to evaluate the adequacy of consideration if

there is a gross disparity in the value of the consideration exchanged

Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal - a student loan accruing interest at a certain rate and payable beginning on a certain date - was unfair because the consideration for their contract was inadequate

"Adequacy" of consideration refers to

"how much" consideration is given

Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal - a student loan accruing interest at a certain rate and payable beginning on a certain date - was unfair because the consideration for their contract was inadequate

If, as Brad claims, the consideration in this problem is inadequate, it may indicate a lack of

bargained-for exchange or mutual assent

Coverage, Inc. (CI), coordinates an insurance network that includes 1 million potential patients. By contracting with CI, a medical provider gains access to the network in exchange for accepting payment at lower than market rates. Doctors, Inc., contracts with CI but, when few patients are forthcoming, files a suit to recover the difference between the contract and the market rates. The court will most likely rule that the contract is

enforceable only because the contract does not lack consideration

Jeff offers Kelly $1,000 for her three-year-old laptop computer. Kelly accepts. If a dispute arises, a court would likely

not question the adequacy of the consideration

Quality Steel Corporation files a suit against Rite Tool Company, claiming that the consideration of their contract is inadequate. The court will most likely not examine the adequacy of the consideration if

something of value passed between the parties

Digital Computers (DC) agrees to sell 100 hard drives to Eagle Computer Stores. Later, to obtain a higher profit, DC demands an extra $100 per drive to complete delivery. With no other source for DC drives, Eagle reluctantly agrees. Regarding this agreement, a court would likely

not enforce it

Applied Methods Corporation promises to give stock options to Brad, a production designer, for processes he has already designed. This promise is

unenforceable

National Business Company and One-State Sales, Inc., agree to simultaneously rescind their contract and enter into a new agreement under which their duties are the same. National later sues One-State to enforce the new agreement. The court

may apply the preexisting rule or allow the rescission

Baked Goods Company agrees to supply Comida Cafe with all the corn ships that it requires for a year. A sudden demand for ethanol results in a shortage of corn, and the price rises sharply. Baked Goods asks Comida to pay a higher price for the chips. This request is

valid due to the unforeseen difficulty of the sudden price increase

Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay.

If CCC offers no reason for the extra $100,000, but says only that it will otherwise stop construction, the agreement is

unenforceable due to the preexisting duty rule

Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay.

If CCC offers, as a reason for the extra $100,000, that ordinary business expenses have increased, the agreement is

unenforceable due to the preexisting duty rule

Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay.

If CCC offers, as a reason for the extra $100,000, that extraordinary unforeseen difficulties will add considerable cost to the project, the agreement is

enforceable because of the unforeseen difficulties

Todos Ltd. agrees to supply United Steel, Inc., with minerals from Venezuela. When the government is unexpectedly overthrown in a revolution, Todos can obtain the goods only at a much higher price. United agrees to pay but later files a suit to recover the difference. The court will most likely rule that

an unforeseen difficulty supported the contract modification here

Superior-Plus Properties, Inc., and Topps Construction Company sign a contract that specifies the amount to be paid. Additional compensation may be justified by

extraordinary difficulties unforeseen at the time of the contract

Sal contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract

The next day, Sal changes her mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sal and Tasty

may agree to a new contract that includes the new price

Sal contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract

Sal and Tasty

may rescind their contract to the extent that it is executory

Mary promises to pay her assistant Ned $10,000 in consideration of the services he provided over the years. Mary never pays Ned. Mary is

not liable, because the consideration is in the past

MicroCorp hires Nick to work for one month at a weekly salary of $400. A MicroCorp representative orally agrees two weeks later to double Nick's salary. This agreement is

unenforceable because Nick has incurred no additional detriment in exchange for MicroCorp's promise

Speedy Assembly Company promises its employees a 10-percent raise at the end of the year if productivity has increased and management feels it is warranted. Speedy must

do nothing.

General Credit Corporation's promise to pay its employees a year-end bonus "if it seems like a good idea at the time" is

an illusory contract

Mei writes a check to Nat in an amount that represents half of her debt to him. On the back of the check, Mei includes the words "payment in full." Nat cashes the check. This discharges the entire debt

if the debt is unliquidated

XL Retail Sales, Inc., promises its salaried employees a bonus at the end of the year if management thinks it is warranted. This promise is

unenforceable because it is not supported by consideration

After an accident with a driver for General Transport Company (GTC), Paul signs a covenant not to sue GTC for damages in a tort action if it pays for the damage to his car. This covenant

bars recovery only if GTC pays

Collection of EZ Sales Company's debt to First Storage Corporation is barred by a statute of limitations. A new promise by EZ to pay the debt

may become enforceable if payments are made

Quinn promises to sell his recreational vehicle (RV) to Sid, who builds a structure behind his house in which to keep it. Quinn's later attempt to renege on the promise is

not effective if Sid detrimentally relied on Quinn's promise

Auto Body Repair Shop (ABRS) promises to pay Ben $1,000 a week to work for ABRS. Ben accepts and quits his job with Car Care Service. ABRS fails to provide a job for Ben. Ben has a cause of action based on

promissory estoppel

George and Holly disagree as to the exact amount one owes the other. They form a new agreement that, on fulfillment, will discharge the prior obligation. This is

an accord and satisfaction

Ann is injured in an accident caused by Bob. Bob agrees to pay Ann $2,500 if she agrees to release Bob from further liability. Ann agrees. If Ann's dmages ultimately exceed $2,500, Ann can

not collect the balance from Bob

Dag and Enita are in an auto accident. Dag offers B $2,000 if Enita promises not to pursue her potential legal claim against Dag. Enita agrees. Later, Enita discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injurt.

The agreement between Dag and Enita is

a release

Dag and Enita are in an auto accident. Dag offers B $2,000 if Enita promises not to pursue her potential legal claim against Dag. Enita agrees. Later, Enita discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injurt.

In Enita's suit against Dag to recover her repair and medical expenses, Enita will most likely recover

nothing.

Milo files a suit against National Corporation under the doctrine of promissory estroppel. Milo must show that

Milo justifiably relied on National's promise to his detriment

Betty pledges to donate $1,000 to the Children's Hospital. On the basis of the pledge, the hospital orders additional equipment. Betty reneges on the pledge. The hospital sues Betty. If the court enforces the pledge, it will be

under the doctrine of prmissory estoppel

Carl pledges $1,000 to the Disaster Relief Organization (DRO). On the basis of the pledge, DRO orders additional rescue equipment. Carl fails to pay. In DRO's suit, a court may enforce the pledge

under the doctrine of promissory estoppel

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