Question 1

A gratuitous promise

Accepted Answer

A gratuitous promise is a promise that is not given in exchange for consideration. It is therefore not enforceable unless it is placed under seal or supported by love and affection. Choice A is incorrect because it describes a situation where there is consideration involved. Choice B is partially correct but leaves out the fact that gratuitous promises can be enforceable if they meet certain exceptions. Choice C is incorrect because placing a promise under seal does not necessarily make it enforceable. Choice D is incorrect because love and affection do not provide consideration.

Question 2

Hofflehass Architectural Ltd was hoping to persuade the Town of Buchanan to create a new beachfront resort.Buchanan said that it was not yet willing to commit itself to such a project.However, it also said that it would likely agree to any proposal that met certain specifications.On that basis, Hofflehass spent $150 000 in creating a proposal that met all of the town's specifications.It presented the proposal and further explained that it would charge $2 million to actually undertake the construction project.The town's officials, however, said that they were no longer interested in a beachfront resort.Although Hofflehass cannot force Buchanan to pay it $2 million to create the proposed resort, it can use the doctrine of promissory estoppel to recover its expenses of $150 000.

Accepted Answer

False

Question 3

Patricia and Charlie entered into a written agreement.Patricia promised to pay $5000 to Haden, who is Charlie's brother.Charlie placed his seal on the document, but Patricia did not do so.Three days later, Charlie promised that he would design a new computer program for Bethany, Patricia's sister, in exchange for Patricia's promise.Which of the following statements is the most accurate?

Accepted Answer

Patricia's promise is not enforceable because it was not given in exchange for consideration. Charlie's promise to design a computer program came after the initial agreement and therefore cannot be considered consideration for Patricia's initial promise to pay $5000 to Haden. Additionally, Charlie's placing of a seal on the document does not make Patricia's promise enforceable as a seal is not required for a contract to be binding. Option A is incorrect as consideration must be provided, but it does not have to be a benefit to the other party. Option B is incorrect for the reasons stated above. Option C is incorrect as Charlie's promise was made after Patricia's initial promise and is therefore not consideration for that promise. Option E is also incorrect as there is no indication that Charlie's designing of the program is linked to Haden receiving payment from Patricia.

Question 4

Dina threatened to sue Chris for $25 000 unless he immediately paid her $10 000.Chris paid $10 000.He will be entitled to recover that money as long as he later proves that Dina honestly and mistakenly thought she had the right to sue Chris for $25 000.

Accepted Answer

Chris would not be entitled to recover the money simply because Dina honestly and mistakenly thought she had a right to sue. The legality of the payment and the ability to recover it depend on whether the threat constituted duress, the legality of the claim, and whether the payment was made voluntarily under a mistaken belief without duress or undue influence.

Question 5

Alpha Corp entered into an agreement with Beta Inc.Alpha promised to transfer certain equipment to Beta and Beta promised to pay $50 000 to Gamma Ltd.Alpha has provided sufficient consideration but Beta has not.

Accepted Answer

The statement implies that only Alpha provided consideration, while Beta did not. For a contract to be valid, both parties must provide consideration, which is something of value exchanged in the agreement. Therefore, the statement is false.

Question 6

Epsilon Inc and Delta Ltd entered into an agreement.Epsilon promised to pay $10 000 to Delta in March.Delta promised to deliver a piece of machinery to Epsilon in June.Epsilon paid the money in March.It is now April.The parties do not yet have a contract because while Delta has given a promise, it has not yet performed that promise.

Accepted Answer

The parties do have a contract as soon as the agreement was made and both parties exchanged promises (Epsilon to pay $10,000 and Delta to deliver machinery), regardless of whether the performance (delivery of machinery) has occurred yet.

Question 7

Luke threatened to sue Leia for $50 000 unless she immediately paid $30 000 to him.Leia paid $30 000 as requested.Luke is entitled to keep that money even if Leia later proves that he never honestly believed in the validity of the lawsuit that he threatened.

Accepted Answer

In many jurisdictions, if Leia can prove that Luke never honestly believed in the validity of the lawsuit he threatened, the payment made by Leia could be considered as made under duress or as a result of an unjust enrichment, potentially entitling her to a refund.

Question 8

Canadian courts consistently hold that a promise to perform a pre-existing contractual obligation cannot provide consideration under a new contract with the same party.They apply that rule because it always reflects commercial reality.

Accepted Answer

Canadian courts recognize that a promise to perform a pre-existing contractual obligation can sometimes provide consideration under a new contract with the same party, especially if there are new or modified terms that provide some benefit or detriment not originally contemplated. This approach allows for flexibility and acknowledges the complexities of commercial realities.

Question 9

A gratuitous promise is generally not enforceable.

Accepted Answer

A gratuitous promise is one that lacks consideration, meaning that there is no exchange of something of value between the parties involved. Without consideration, a promise is generally not legally binding and enforceable.

Question 10

The doctrine of promissory estoppel operates only if the representor promised that an existing right would not be strictly enforced.

Accepted Answer

Promissory estoppel does not require that the representor promised that an existing right would not be strictly enforced. It only requires that the representor made a clear and definite promise that the promisor reasonably relied on to their detriment.

Question 11

Tracey is a police officer.While she was on vacation, she agreed to act as a security guard at a concert in exchange for payment of $500.She performed the work, but the concert promoter refuses to pay her.He is entitled to do so because the law wants to discourage public servants like Tracey from improperly taking advantage of their special skills for private gains.

Accepted Answer

The refusal to pay Tracey is not justified by the law wanting to discourage public servants from using their skills for private gain in this context. If Tracey agreed to work as a security guard and performed the work, she is entitled to the agreed payment, regardless of her primary occupation as a police officer. The law generally enforces contracts unless the contract is for an illegal act or against public policy, and simply working as a security guard while off-duty does not typically fall into these categories.

Question 12

Gareth recently graduated with the highest GPA of any student in Business.He has been hired by a prestigious bank in London, but that job will not start for three months.To fill the time and to make a little extra money, Gareth posted an advertisement around campus: "Top Flight Tutorials-Learn from the Best-$100 Per Hour-Minimum of Ten Sessions." Reva is a struggling student in the first year of the Business program.Desperate to improve her grades, she signed a contract with Gareth and paid $1000 for ten tutorials.That agreement, which Gareth personally drafted, expressly states: "This agreement is subject to the usual rules regarding assignments." After the first tutorial, Reva was delighted with Gareth's services.She found him extraordinarily arrogant, but also very smart.For the second tutorial, however, she was surprised when Evan, a mediocre second-year student, showed up instead of Gareth.As Evan explained, Gareth decided that he wanted to travel, rather than deliver tutorials, in the time before his bank job started.Gareth therefore assigned his role under the contract to Evan.Reva has no basis for complaint because she expressly agreed to abide by the general law of assignments.

Accepted Answer

The general law of assignments allows for the assignment of benefits under a contract but not the assignment of duties or obligations without the consent of the other party. Since Reva contracted for Gareth's personal services based on his qualifications, she has a basis for complaint if those services are assigned to someone else without her agreement.

Question 13

A statutory assignment is "subject to the equities." That means that even if the requirements for a statutory assignment have been satisfied, it will be enforced only if a court believes that, in light of all of the circumstances, it would be fairer for the assignee, rather than the debtor, to win the case.

Accepted Answer

A statutory assignment is not "subject to the equities," meaning it is not dependent on fairness considerations by the court. Once the legal requirements are met, the assignee has the same rights as the assignor, regardless of fairness.

Question 14

In exchange for Miles's promise to pay $10 000 to the Society for Prevention of Cruelty to Animals, Fran promised to give up eating meat for one year.Which of the following statements is TRUE?

Accepted Answer

The facts demonstrate a mutual exchange of value. Miles promised to pay $10,000 to the Society for Prevention of Cruelty to Animals in exchange for Fran's promise to give up eating meat for one year. This shows a bargain for exchange or mutual consideration from both parties.

Question 15

In late May, Lovin was excited about his upcoming graduation ceremonies.Because he wanted to look his best, he visited a tailor and agreed to pay $500 for a new suit.The contract required Lovin to pay the full price on June 1 and entitled him to collect the finished product on June 10.As promised, Lovin paid the full amount on the first of June.At that point, it can be said that he gave "past consideration" in support of the contract.

Accepted Answer

Past consideration refers to something that has already been done in the past, before the contract was formed. In this case, Lovin's payment of $500 was not past consideration because it was paid after the contract was formed. It was an example of present consideration.

Question 16

Which of the following statements is TRUE?

Accepted Answer

The answer of Which of the following statements is TRUE?
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Question 17

The Canadian government announced its plan to create and circulate a new $100 bill.Because Marta knew that Bernie was an avid collector of currency, she promised to give him the first new $100 bill that she received from her work at a flea market.The agreement was placed in writing and Bernie applied his seal to the document.Shortly after the government released the new $100 bills, Marta received one from a customer at the flea market.She is required to deliver it to Bernie.

Accepted Answer

The agreement between Marta and Bernie likely lacks consideration, which is a necessary element for a contract to be enforceable. A promise to give a gift, without more, does not constitute a legally binding contract.

Question 18

Zeta Corp was contractually obliged to pay $25 000 cash to Omega Inc on June 15.On June 1st, Omega agreed to discharge the entire debt if Zeta immediately gave a cheque worth $15 000.Zeta did so.Nevertheless, on June 15th, Omega demanded payment of another $10 000.It is entitled to receive that amount.

Accepted Answer

Omega Inc agreed to discharge the entire debt if Zeta immediately gave a cheque worth $15 000, which Zeta did. Therefore, Zeta fulfilled its obligation and does not owe Omega any further payment.

Question 19

As a wedding anniversary present for himself and his wife, Louisa, Mario entered into an agreement with Stanislaus, a world famous pianist.Under the terms of that agreement, Mario promised to pay Stanislaus $52 000.Stanislaus promised that he would provide weekly lessons for one year for both Mario and Louisa.After two weeks of lessons, Mario completely lost interest, but Louisa is eager to continue.Stanislaus, however, refuses to go on.Louisa has the right to demand the remainder of the lessons from Stanislaus because the courts generally assume that if one party (such as Mario) enters into a contract for the benefit of another person (such as Louisa), the promise provided by the other contractual party (such as Stanislaus) is held on trust.

Accepted Answer

Louisa does not automatically have the right to demand the remainder of the lessons from Stanislaus based on the information provided. The ability for a third party (Louisa) to enforce a contract generally depends on the specifics of the contract and the laws of the jurisdiction. Unless the contract explicitly grants Louisa rights as a third-party beneficiary, she may not have standing to enforce the contract terms against Stanislaus.

Question 20

Because he was in love with her, Noriel promised to sell his car to Marina for $500 and Marina agreed to pay $500 for the car.At the time of that agreement, Marina stressed that the deal was purely commercial and made it clear that she did not share Noriel's hopes for an intimate relationship.Before the sale was performed, Noriel fell in love with another woman, Valerie.He therefore now refuses to transfer the car to Marina.The actual market value of the car is $7500.Which of the following statements is TRUE?

Accepted Answer

Marina and Noriel exchanged mutual promises, which constitutes consideration. Noriel promised to sell the car for $500, and Marina agreed to buy it for that amount. This agreement is enforceable regardless of the car's market value or Noriel's change of heart.

Quiz 8: Consideration and Privity