Deck 10: Nature and Classification

Question 1

Consideration. On Brenda Sniezek's first day of work for the Kansas City Chiefs Football Club, she signed a document that purported to compel arbitration of any disputes that she might have with the Chiefs. In the document, Sniezek agreed to comply with and be bound by the constitution and bylaws of the National Football League (NFL) at all times. She agreed to refer all disputes to the NFL commissioner for a binding decision. On the commissioner's decision, she agreed to release the Chiefs and others from any related claims. Nowhere in the document did the Chiefs agree to do anything. Was there consideration for the arbitration provision Explain.

Answer 1

In the given case, person B signed a document of C club football in which she was prevented from entering into arbitration for any kind of disputes arise with C club football. Person B promised to follow all the laws of the NFL (National Football League) and release C club football from any claims.
Under, the Arbitration provision , both the parties enter into an agreement stating that the case will be settled outside the court.
Consideration is a vital part of a contract under which both the parties exchange mutual performances. For example, person A asked person B to clean his garden in exchange of $100. In this example, person B cleaned the A's garden for $100. Hence, the amount of $100 is consideration.
In the given case, an agreement took place between person B and C club football where B promised to follow the laws stated by NFL and chiefs of C club football did not do anything in return.
Therefore, there is lack of consideration under arbitration provision as only one party performed.

Question 2

A Question of Ethics-Promissory Estoppel. Claudia Aceves borrowed $845,000 from U.S. Bank to buy a home. Less than two years into the loan, she could no longer afford the monthly payments. The bank notified her that it planned to foreclose on her home. (Foreclosure is a process that allows a lender to repossess and sell the property that secures a loan-see Chapter 26.) The bank offered to modify Aceves's mortgage if she would forgo bankruptcy. In reliance on the bank's promise, she agreed. Once she withdrew the filing, however, the bank foreclosed and began eviction proceedings. Aceves filed a suit against the bank for promissory estoppel.
1. Could Aceves succeed in her claim of promissory estoppel Why or why not
2. Did Aceves or U.S. Bank behave unethically Discuss.

Answer 2

Doctrine of Promissory Estoppel: an individual relied on the promise made another have a measure of recovery. In other words, it allows a party to recover for promise made, even though it is without consideration.
Elements of Doctrine of Promissory Estoppel:
1. Promise must be clear and definite.
2. Promisor has expected that promise would have relied on the promise.
3. Promisee refrained or acted some act relying on the promise.
4. Enforcement is necessary to seek justice.
Facts : $845,000 was borrowed by A to buy a home from bank. Before two years, payment of monthly loan installment became difficult for her. Bank offered that in case she forgoes bankruptcy, A's loan will be modified. She relied on bank's promise and withdrew her filling from foreclosure of home. But later on bank foreclosed her home.
1.
In the above case, A may file lawsuit for promissory estoppel as A relied on the promise made by the bank and forgo her bankruptcy. All the elements of Doctrine of Promissory Estoppel are satisfied in this case, thus, A can recover for the promise made even though there is lack of consideration.
2.
Yes, it was unethical on the part of U.S bank for not keeping the promise they made, Bank promised A for modifying the terms of loan if she declares herself bankrupt, but the foreclose home.

Question 3

Critical Legal Thinking. Under what circumstances should courts examine the adequacy of consideration

Answer 3

The circumstances under which courts should examine the adequacy of consideration are the following:
• Under the circumstances where the consideration itself is not legally sufficient.
• Under the circumstance where a huge amount of disparity and discrepancy exists in the value and the amount of consideration that is exchanged. This requires closer scrutiny by the courts.
• Under the circumstance when unequal bargains are made and the requirement for ascertaining the absence of defects in the contracts exist.

Question 4

Preexisting Duty. Ben hired Lewis to drive his racing car in a race. Tuan, a friend of Lewis, promised to pay Lewis $3,000 if he won the race. Lewis won the race, but Tuan refused to pay the $3,000. Tuan contended that no legally binding contract had been formed because he had received no consideration from Lewis for his promise to pay. Lewis sued Tuan for breach of contract, arguing that winning the race was the consideration given in exchange for Tuan's promise to pay. What rule of law discussed in this chapter supports Tuan's claim Explain.

Question 5

In September, Sharyn agrees to work for Totem Productions, Inc., at $500 a week for a year beginning January 1. In October, Sharyn is offered the same work at $600 a week by Umber Shows, Ltd. When Sharyn tells Totem's president about the other offer, he tears up Sharyn's contract and agrees that she will be paid $575. Is the new contract binding Explain.

Question 6

Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text.
What is required for consideration to be legally sufficient

Question 7

John operates a motorcycle repair shop from his home but finds that his business is limited by the small size of his garage. Driving by a neighbor's property, he notices a for-sale sign on a large, metal-sided garage. John contacts the neighbor and offersto buy the building, hoping that it can be dismantled and moved to his own property. The neighbor accepts John's payment and makes a generous offer in return: if John will help him dismantle the garage, which will take a substantial amount of time, he will help John reassemble it after it has been transported to John's property. They agree to have the entire job completed within two weeks. John spends every day for a week working with his neighbor to disassemble the building. In his rush to acquire a larger workspace, he turns down several lucrative repair jobs. Once the disassembled building has been moved to John's property, however, the neighbor refuses to help John reassemble it as he originally promised. Using the information presented in the chapter, answer the following questions.
1. Are the basic elements of consideration present in the neighbor's promise to help John reassemble the garage Why or why not
2. Suppose that the neighbor starts to help John but then realizes that, because of the layout of John's property, putting the building back together will take much more work than dismantling it took. Under which principle discussed in the chapter might the neighbor be allowed to ask for additional compensation
3. What if John's neighbor made his promise to help reassemble the garage at the time he and John were moving it to John's property, saying, "Since you helped me take it down, I will help you put it back up." Would John be able to enforce this promise Why or why not
4. Under what doctrine discussed in the chapter might John seek to recover the profits he lost when he declined to do repair work for one week

Question 8

Question with Sample Answer-Past Consideration. Daniel, a recent college graduate, is on his way home for the Christmas holidays from his new job. He gets caught in a snowstorm and is taken in by an elderly couple who provide him with food and shelter. After the snowplows have cleared the road, Daniel proceeds home. Daniel's father, Fred, is most appreciative of the elderly couple's action and in a letter promises to pay them $500. The couple, in need of funds, accept Fred's offer. Then, because of a dispute with Daniel, Fred refuses to pay the couple the $500. Discuss whether the couple can hold Fred liable in contract for the services rendered to Daniel.

Question 9

Before Maria starts her first year of college, Fred promises to give her $5,000 when she graduates. She goes to college, borrowing and spending far more than $5,000. At the beginning of the spring semester of her senior year, she reminds Fred of the promise. Fred sends her a note that says, "I revoke the promise." Is Fred's promise binding Explain.

Question 10

Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text.
What are some examples of contracts that lack consideration

Question 11

Accord and Satisfaction. Merrick grows and sells blueberries. Maine Wild Blueberry Co. agreed to buy all of Merrick's crop under a contract that left the price unliquidated. Merrick delivered the berries, but a dispute arose over the price. Maine Wild sent Merrick a check with a letter stating that the check was the "final settlement." Merrick cashed the check but filed a suit for breach of contract, claiming that he was owed more. What will the court likely decide in this case Why

Question 12

Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text.
What is an accord and satisfaction

Question 13

Past Consideration. Access Organics, Inc., hired Andy Hernandez to sell organic produce. Later, Hernandez signed an agreement not to compete with Access for two years following the termination of his employment. He did not receive a pay increase or any other new benefits in return for signing the agreement. When Access encountered financial trouble, Hernandez left and began to compete with his former employer. Access filed a lawsuit against Hernandez. Is the noncompete agreement enforceable Discuss

Question 14

Answers to the even-numbered questions in this For Review section can be found in Appendix F at the end of this text.In what circumstances might a promise be enforced despite a lack of consideration

Question 15

Rescission. Farrokh and Scheherezade Sharabianlou agreed to buy a building owned by Berenstein Associates for $2 million. They deposited $115,000 toward the purchase. Before the deal closed, an environmental assessment of the property indicated the presence of chemicals used in dry cleaning. This substantially reduced the property's value. Do the Sharabianlous have a good argument for the return of their deposit and rescission of the contract Explain.

Question 16

Case Problem with Sample Answer-Statute of Limitations. Leonard Kranzler loaned Lewis Saltzman $100,000. Saltzman made fifteen payments on the loan, but this did not repay the entire amount. More than ten years after the date of the loan, but less than two years after the date of the last payment, Kranzler filed a suit against Saltzman to recover the outstanding balance. Saltzman claimed that the suit was barred by a ten-year statute of limitations. Does Kranzler need to prove a new promise with new consideration to collect the unpaid debt Explain.