Deck 11: Consideration

Question 1

A driver offers to clean the bus, if the bus conductor does not smoke until the bus reaches the destination. Since the detriment does not confer a tangible benefit on the promisor, it is not legally sufficient.

Answer 1

False

Question 2

Consideration is a universal requirement in almost all legal systems, not just that based on the English common law.

Answer 2

False

Question 3

Because the consideration on option contracts is most often nominal, its recital in the written instrument is usually a mere formality, and need not be paid.

Answer 3

False

Question 4

The promise to make a gift is, without more, generally an enforceable contract.

Question 5

If a promisor gives an illusory promise, he/she gives no consideration and no contract is formed.

Question 6

A court will usually invalidate a contract if the consideration is inadequate.

Question 7

William billed Denise $200 for cleaning her computer of viruses, but Denise complained: "My computer is still behaving weirdly." It turned out that William had missed some viruses in hidden files. Denise said, "I'm paying you only $100 by check marked 'Paid in Full.'" William cashed the check and then sent Denise a statement showing $100 still owing. Denise owes the other $100.

Question 8

John rescues Oswald's dog and Oswald promises to pay John $50. The promise is an enforceable contract.

Question 9

Mable agrees to quit smoking in return for her boss's promise to provide a better medical insurance coverage. Because Mable herself actually receives a benefit-fewer health-related smoking problems-she has suffered no detriment, so there is no consideration and the boss's promise is not enforceable.

Question 10

The UCC permits one party to discharge, without consideration, a claim arising out of an alleged breach of contract by the other party.

Question 11

The receipt by one person of something legal he/she had no pre-existing right to is known as a novation.

Question 12

Parties may modify a contract with no new consideration by substituting a new contract for the old one.

Question 13

An unforeseen difficulty arising after a contract is made may be resolved by an accord and satisfaction.

Question 14

Jay offers to pay $100 to his neighbor, if the neighbor promises not to dump his garbage in Jay's backyard. Jay has a legal obligation to pay his neighbor.

Question 15

In a bilateral agreement, if one side is not bound, neither is the other.

Question 16

Coal-fired Electric Company agrees to "buy all the coal it needs" from Coal Company for five years. Since Electric Company did not necessarily agree to buy any coal at all, it has made an illusory promise unsupported by any consideration and can quit its relationship with Coal Company without consequence.

Question 17

At common law, the modification of an existing contract does not require consideration to be enforceable.

Question 18

Bank offered a $1000 reward to anyone who helped the police catch two bank robbers. Sally, an employee of the bank, did help in such an instance. She is entitled to the $1000.

Question 19

As at common law, consideration under Article 2 is required for all contracts and for all modifications of contracts.

Question 20

In Gross v. Diehl Specialties Intern., Inc., the court determined that the plaintiff's post-employment benefits should revert to those in his original contract, because he received detriment but no benefit from the new contract.

Question 21

In Board of Control of Eastern Michigan University v. Burgess, which of the following led to the final judgment by the court?

A) Defendant received no consideration for the purported option.
B) The consideration offered was inadequate.
C) The defendant revoked the offer prior to its acceptance.
D) The purchase price was increased.
E) An enforceable offer was created.

Question 22

Rony takes his car to a car repair workshop to get it repaired. The cost of the repair has not been discussed beforehand in detail, although the cost in the nearby areas is normally around $1,000. After the repair, Rony and the mechanic agree on a bill of $800. Which of the following statements is correct?

A) A week after the repair, the mechanic sues Rony for a bill of $1,000.
B) After the repair, the mechanic agrees to give a discount of 10 percent. A week later, the mechanic sues Rony for a bill of $280.
C) A week after the repair, Rony sends a check of $100 marked "payment in full," which is encashed by the mechanic. A week later, the mechanic sues Rony for a bill of $700.
D) When Rony reaches home, the car's battery blows up due to an extra fitting made by the mechanic. Rony pays the mechanic just $100.
E) A week after the repair, Rony sends a check of $100 marked "payment in full," which is encashed by the mechanic. A week later, the mechanic sues Rony for a bill of $800.

Question 23

Which of the following promises is enforceable without consideration according to the common law?

A) Alleged breach of contract
B) Bankruptcy
C) International contracts
D) Promissory estoppel
E) Convention on contracts

Question 24

Deborah owed Colleen $500, and the debt was past due. Colleen said, "If you pay me $300 now, I'll forget the other $200." Deborah paid Colleen the $300 and owes no more.

Question 25

In what cases are promises enforceable without consideration?

Question 26

Which of the following promises is enforceable without consideration according to statutory law?

A) Promissory estoppel
B) Revival of promise barred by statute of limitations
C) International contracts
D) Voidable duties
E) Moral obligation

Question 27

On May 1, 1999; Alex promises to sell his bike to Jerry for $400 on May 20, 1999. On May 10, due to an emergency, Jerry offers to pay $900, if Alex can sell his bike on May 11. Alex sells his bike on May 11, but Jerry refuses to pay $900 in return, to which Alex files suit in the court on May 15, 2005. The court dismisses the case due to which of the following reasons?

A) Running of statute of limitations
B) Voidable duties
C) Promissory estoppels
D) Alleged breach of contract
E) Moral obligation

Question 28

Billy contracts to build Harry a house for $100,000. While laying the foundation, Billy unexpectedly discovers that the area is prone to lightning, to avoid which a lightning rod has to be installed. To ensure that Billy does not delay, Harry agrees to pay $50,000 more than originally agreed. In this unforeseen difficulty arising after the contract is made, in which of the following ways can Billy claim the remaining amount?

A) After the house is constructed, Harry refuses to make the extra payment. The lightning rod costs Billy $100. Harry has no obligation because he only made an illusory promise.
B) After the house is constructed, Harry refuses to make the extra payment. The lightning rod costs Billy $45,000. The problem may be resolved by an accord and satisfaction.
C) After the house is constructed, Harry refuses to make the extra payment. After persistent bargaining, Harry gives a check of $100,100 to Billy, which is encashed by him.
D) After the house is constructed, Harry refuses to make the extra payment. After persistent bargaining, Billy agrees to settle for $90,000 and an old bike from Harry.
E) After the house is constructed, Harry refuses to make the extra payment. After persistent bargaining, Billy agrees to settle for $90,000, if Harry tutored Billy's son.

Question 29

In Denney v. Reppert, which of the following led to the final judgment by the court?

A) Illusory promise
B) Out of bailiwick
C) Promissory estoppel
D) Promise revived after statute of limitations has passed
E) Liquidated damage

Question 30

An unforeseen difficulty arising after a contract is made may be resolved by a(n) _____.

A) composition agreement
B) promissory estoppel with detrimental reliance
C) needs contract
D) accord and satisfaction
E) reservation of rights

Question 31

_____ is an agreement where a defaulter can pay money to all those lenders whom he owes money to on a pro-rata basis.

A) Exclusive dealing agreement
B) Creditors' composition
C) Unliquidated debt
D) Covenant not to sue
E) Firm offer

Question 32

Which of the following considerations is legally insufficient?

A) Tony bought a book for $100. Ruby offers to buy it for $10.
B) Tony bought a text book for $100. He offers to give it to Ruby if Ruby helps him move into his new dorm room.
C) Tony bought a book for $1,000. Ruby offers to buy it for $2,000 if it does not rain the next day.
D) Tony bought a book for $100. He offers to sell it to Ruby for free if she helps him befriend the new girl in their dorm.
E) None of these is insufficient consideration.

Question 33

A promise to pay a debt discharged by the statute of limitations is unenforceable because the debtor has received no new consideration.

Question 34

An illusory contract lacks consideration because one side actually agrees to suffer no "detriment."

Question 35

What is consideration? What are the purposes served by consideration? What are the elements of consideration?

Question 36

In Gross v. Diehl Specialties Intern., Inc., which of the following led to the final judgment made by the court?

A) The owner sold the company to the Diehl enterprises.
B) The company had declined severely in 1983 and 1984.
C) The plaintiff was terminated by the defendant.
D) The 1982 contract was not the operative contract because there existed no consideration for it.
E) The promise to carry out an already existing contractual duty does not constitute consideration.

Question 37

A railroad company offers to purchase as much iron as its board of directors might order from an iron producer. After two months, the iron producer sues the railroad saying that they had not purchased any iron thus far from them. The railroad is not legally bound to give compensation to the iron producer. Under which clause can the railroad justify its stand?

A) Illusory promise
B) Preexisting duty
C) Past consideration
D) Section 2-209 of UCC
E) Accord and satisfaction

Question 38

The mere promise to give consideration for some benefit to be received in return is sufficient consideration to make a contract.

Question 39

Excavators, Inc. ("EI") agreed to dig a foundation for Ralph's barn for $7000. EI will be entitled to additional compensation in which situation?

A) EI discovered the backhoe it planned to use on the job required $600 in service work, and added that amount to the bill.
B) EI misjudged how long it would take to do the job, and billed Ralph for three hours' additional time.
C) EI discovered very significant underground water flow which had to be addressed, and it billed Ralph for doing so.
D) EI complained that there were no available bathrooms for its crew to use-they had to drive eight miles to a quick-mart store-and EI billed Ralph for this time.
E) In none of these situations is EI entitled to additional compensation.

Question 40

An apparently illusory promise may become enforceable if a judge implies an obligation that the parties act in good faith.

Question 41

Essay Questions
Suggestion: Fifteen points total, five for each question. Give three points if one-half of one question is correct. Insist that the CRL be stated ("controlling rule of law")..
Ace Construction contracted with Dubious to remodel Dubious' auto showroom. Ace ordered windows from Windows Co. for a total of $6000. A few weeks later, before delivery was due, Windows Co. contacted Ace and stated that there was an unexpected price increase from its supplier; Windows Co. requested that Ace pay an increased price of $6600 for the windows. Ace agreed and the parties confirmed the conversation with a signed memo. After the windows were delivered, however, Ace determined it wouldn't pay more than the original $6000.
Dubious wrote to the Bulgemobile Company, "The hot thing is electric cars. For the 2017 season I'll order Bulgemobile Electrics in such numbers as I want at $43,000 each." In the first quarter of '17, Dubious ordered and sold three Electrics each month, and could have sold more. In late March Bulgemobile notified Dubious that no more deliveries would be made.
Dubious perceived that if he could purchase the lot next door to his existing car lot, he would have more room for his used cars. On April 1 he telephoned Owner. She said: "Yes, I will sell you the lot for $85,000. You can have two weeks to think about it." Dubious responded: "That's a lot of money. I'll pay you $80,000." On April 6th Owner mailed a letter to Dubious that read: "I changed my mind. What with the price of land around here, I want $95,000 for the lot." The letter arrived at Dubious' place on the 8th; however, on the 7th Dubious--he'd changed his mind, too--had mailed a letter to Owner accepting the deal at $85,000.
Alice Ace by written contract hired a specialty contractor, Trusses Inc., to "provide all labor and materials, tools, scaffolding and things necessary for erection of the trusses, and to execute the plans according to their specifics" for Dubious' building. Trusses' crew erected 38 of the trusses, stopped work for the day and, overnight, 12 of them fell off the building. The next morning Ace told Trusses' boss to remove the fallen trusses, disassemble, inspect, rebuild, and re-erect them. This was done. Trusses was paid by Ace all the sums owed under their written contract, together with all charges for extra work except for the costs incurred in connection with the fallen trusses.
Meanwhile, Carpenter, one of Ace's best finish carpenters, announced his intention to move to a distant city. At his going-away party, Ms Ace stated that in appreciation for Carpenter's ten years of good work she was going to pay and mail to him a severance bonus of $250 a month for the next year. Carpenter thanked his boss and after the party called up his wife and told her they could afford the $100-a-month-more-expensive apartment they'd looked at in the new city; the Carpenters then signed a lease for that apartment. Ms Ace paid the $250 for two months, and then stopped.
Is Owner bound to sell Dubious the lot next door for $85,000? Yes or no and explain.

Question 42

Essay Questions
Suggestion: Fifteen points total, five for each question. Give three points if one-half of one question is correct. Insist that the CRL be stated ("controlling rule of law")..
Ace Construction contracted with Dubious to remodel Dubious' auto showroom. Ace ordered windows from Windows Co. for a total of $6000. A few weeks later, before delivery was due, Windows Co. contacted Ace and stated that there was an unexpected price increase from its supplier; Windows Co. requested that Ace pay an increased price of $6600 for the windows. Ace agreed and the parties confirmed the conversation with a signed memo. After the windows were delivered, however, Ace determined it wouldn't pay more than the original $6000.
Dubious wrote to the Bulgemobile Company, "The hot thing is electric cars. For the 2017 season I'll order Bulgemobile Electrics in such numbers as I want at $43,000 each." In the first quarter of '17, Dubious ordered and sold three Electrics each month, and could have sold more. In late March Bulgemobile notified Dubious that no more deliveries would be made.
Dubious perceived that if he could purchase the lot next door to his existing car lot, he would have more room for his used cars. On April 1 he telephoned Owner. She said: "Yes, I will sell you the lot for $85,000. You can have two weeks to think about it." Dubious responded: "That's a lot of money. I'll pay you $80,000." On April 6th Owner mailed a letter to Dubious that read: "I changed my mind. What with the price of land around here, I want $95,000 for the lot." The letter arrived at Dubious' place on the 8th; however, on the 7th Dubious--he'd changed his mind, too--had mailed a letter to Owner accepting the deal at $85,000.
Alice Ace by written contract hired a specialty contractor, Trusses Inc., to "provide all labor and materials, tools, scaffolding and things necessary for erection of the trusses, and to execute the plans according to their specifics" for Dubious' building. Trusses' crew erected 38 of the trusses, stopped work for the day and, overnight, 12 of them fell off the building. The next morning Ace told Trusses' boss to remove the fallen trusses, disassemble, inspect, rebuild, and re-erect them. This was done. Trusses was paid by Ace all the sums owed under their written contract, together with all charges for extra work except for the costs incurred in connection with the fallen trusses.
Meanwhile, Carpenter, one of Ace's best finish carpenters, announced his intention to move to a distant city. At his going-away party, Ms Ace stated that in appreciation for Carpenter's ten years of good work she was going to pay and mail to him a severance bonus of $250 a month for the next year. Carpenter thanked his boss and after the party called up his wife and told her they could afford the $100-a-month-more-expensive apartment they'd looked at in the new city; the Carpenters then signed a lease for that apartment. Ms Ace paid the $250 for two months, and then stopped.
a) Is Ace bound to pay Trusses the costs incurred in connection with the fallen trusses? Yes or no and explain.
b) Is Ace bound to pay Carpenter the $150 per month? Yes or no and explain.

Question 43

Essay Questions
Suggestion: Fifteen points total, five for each question. Give three points if one-half of one question is correct. Insist that the CRL be stated ("controlling rule of law")..
Ace Construction contracted with Dubious to remodel Dubious' auto showroom. Ace ordered windows from Windows Co. for a total of $6000. A few weeks later, before delivery was due, Windows Co. contacted Ace and stated that there was an unexpected price increase from its supplier; Windows Co. requested that Ace pay an increased price of $6600 for the windows. Ace agreed and the parties confirmed the conversation with a signed memo. After the windows were delivered, however, Ace determined it wouldn't pay more than the original $6000.
Dubious wrote to the Bulgemobile Company, "The hot thing is electric cars. For the 2017 season I'll order Bulgemobile Electrics in such numbers as I want at $43,000 each." In the first quarter of '17, Dubious ordered and sold three Electrics each month, and could have sold more. In late March Bulgemobile notified Dubious that no more deliveries would be made.
Dubious perceived that if he could purchase the lot next door to his existing car lot, he would have more room for his used cars. On April 1 he telephoned Owner. She said: "Yes, I will sell you the lot for $85,000. You can have two weeks to think about it." Dubious responded: "That's a lot of money. I'll pay you $80,000." On April 6th Owner mailed a letter to Dubious that read: "I changed my mind. What with the price of land around here, I want $95,000 for the lot." The letter arrived at Dubious' place on the 8th; however, on the 7th Dubious--he'd changed his mind, too--had mailed a letter to Owner accepting the deal at $85,000.
Alice Ace by written contract hired a specialty contractor, Trusses Inc., to "provide all labor and materials, tools, scaffolding and things necessary for erection of the trusses, and to execute the plans according to their specifics" for Dubious' building. Trusses' crew erected 38 of the trusses, stopped work for the day and, overnight, 12 of them fell off the building. The next morning Ace told Trusses' boss to remove the fallen trusses, disassemble, inspect, rebuild, and re-erect them. This was done. Trusses was paid by Ace all the sums owed under their written contract, together with all charges for extra work except for the costs incurred in connection with the fallen trusses.
Meanwhile, Carpenter, one of Ace's best finish carpenters, announced his intention to move to a distant city. At his going-away party, Ms Ace stated that in appreciation for Carpenter's ten years of good work she was going to pay and mail to him a severance bonus of $250 a month for the next year. Carpenter thanked his boss and after the party called up his wife and told her they could afford the $100-a-month-more-expensive apartment they'd looked at in the new city; the Carpenters then signed a lease for that apartment. Ms Ace paid the $250 for two months, and then stopped.
a) Is the Ace bound to pay the increased price for the windows? Yes or no and explain.
b) Dubious sues Bulgemobile for the lost profits on nine Electrics. Who wins and why?