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Business Law 1 - MGMT 265

Terms in this set (1218)


John Stevens owned a dilapidated apartment that he rented to James and Cora Chesney for a low rent. The Chesneys began to remodel and rehabilitate the unit. Over a four-year period, they installed two new bathrooms, carpeted the floors, installed new septic and heating systems, and rewired, replumbed, and painted the apartment. Stevens periodically stopped by and saw the work in progress. The Chesneys transformed the unit into a respectable apartment. Three years after their work was done, Stevens served the Chesneys with an eviction notice. The Chesneys counterclaimed, seeking the value of the work they had done. Are they entitled to it? Argument for Stevens: Mr. Stevens is willing to pay the Chesneys exactly the amount he agreed to pay: nothing. The parties never contracted for the Chesneys to fix up the apartment. In fact, they never even discussed such an agreement. The Chesneys are making the absurd argument that anyone who chooses to perform certain work, without ever discussing it with another party, can finish the job and then charge it to the other person. If the Chesneys expected to get paid, obviously they should have said so. If the court were to allow this claim, it would be inviting other tenants to make improvements and then bill the landlord. The law has never been so foolish. Argument for the Chesneys: The law of quasi-contract was crafted for cases exactly like this. The Chesneys have given an enormous benefit to Stevens by transforming the apartment and enabling him to rent it at greater profit for many years to come. Stevens saw the work being done and understood that the Chesneys expected some compensation for these major renovations. If Stevens never intended to pay the fair value of the work, he should have stopped the couple from doing the work or notified them that there would be no compensation. It would be unjust to allow the landlord to seize the value of the work, evict the tenants who did it, and pay nothing.

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 drives me to the doctor and also takes me 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 the memorandum, but he did not in fact alter his will to include Dementas. The estate refused to pay, and Dementas sued. Was there consideration?

In the case, Tallas wrote his memo after Dementas had been providing services for 14 years. What if, in addition to the writing the memo above, Tallas wrote the following memo 14 years ago:

Peter Dementas is my new friend and a very kind person. He has agreed to take me in his car to the grocery store, to the doctor, and on other personal and professional errands as needed for as long as I live in Salt Lake City. Because I do not want to take advantage of my new friend, I will pay Peter $5,000 for fair consideration of these services, which I will leave to him in my will.
Over the years, Tallas and Dementas become dear friends and, although Dementas would have continued to provide the same services for no additional fee simply because he enjoyed spending time with Tallas, Tallas writes the memo included in the case above two months prior to his death. Tallas' estate refuses to pay Dementas any money.
1. The primary issue in this case is: .past consideration

2. In the memo, Tallas provides as consideration.

a promise to act

3. The estate's strongest argument is that there is no valid consideration for Tallas' promise to pay Dementas $50,000 because: .

Deentas had already performed the services for which Tallas Promised to pay

4. Would Dementas be entitled to the $50,000 if he can prove that he continued to provide his services during the two months after the memorandum was written, until Tallas' death?


5. Under what circumstances may the court grant Dementas the $50,000 using promissory estoppel?

Dementas took out a $50,000 loan the week after Tallas' death because he believed he would be able to pay off the loan with the money promised

6. Which of the following promises are provided as consideration under the terms of the memo written 14 years ago?

a promise to pay an agreed upon amount and a promise to provide driving services for an indefinite period of time

7. What is the strongest argument that Tallas' estate can make against the enforcement of the memo written two months prior to Tallas' death?

Demantas was already under a legal duty to provide the services to Tallas under the first memo

8. Does the writing of the earlier memo 14 years ago make the more recent memo enforceable?

No, because the earlier memo obligated Dementas to provide the driving services and a person cannot receive additional consideration for acts the are already required to perform

9. Dementas is entitled to .$5000