Question 1

"The law of contract assumes that people are generally capable of looking after their own interests.An agreement therefore may be enforceable even if the parties do not exchange things of equal value." Discuss that statement.Illustrate your answer with three business law examples.

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Question 2

Betta Corp, a manufacturer, sold widgets to Splendens Inc, a wholesaler.Under the terms of that agreement, Splendens was entitled to resell the widgets to a retailer, but only if its contract with the retailer (1) required the retailer to sell the widgets to its own customers at a list price established by Betta, and (2) required the retailer to pay $500 to Betta for every widget that it sold to a customer at a price that was below the list price established by Betta.Splendens in fact sold the widgets to Siamese Fish Ltd, a retailer.Siamese then sold ten of the widgets to its own customers for less than Betta's list price.Is Siamese required to pay $5000 to either Betta or Splendens? Explain your answer.

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Question 3

"Depending upon the circumstances, a promise to pay a specific sum of money may or may not be enforceable if that promise is given in response to services that have already been received." Explain whether or not that statement is accurate.

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Question 4

"A trust provides am exception to the privity of contract doctrine.The contract is enforced by the person to whom the contractual promise was intended to benefit." Explain the meaning of that statement and indicate whether or not it is true.

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Question 5

Dawn Sumi hosts a national call-in radio program.On a number of occasions, when the on-air discussion concerned computers and electronic devices, she spoke very favourably about the merchandise manufactured by Rabby Electronics Inc.As a result of those compliments, Rabby's business increased dramatically.Rabby was both delighted and surprised: delighted because it was making larger profits and surprised because it had never asked Sumi for the endorsements.As a gesture of thanks, the president of Rabby wrote to Sumi and promised to pay him $25 000 within six weeks.In reliance upon that promise, Sumi immediately entered into a contract with a builder to add a sun deck to her home at a cost of $25 000.Sumi never would have entered into that contract if she had not received Rabby's promise.A week later, however, the president of Rabby changed his mind and told Sumi that she would not be receiving the money after all.Is Rabby entitled to do so? Did a contract exist between the parties? If no contract existed between the parties, is Rabby nevertheless obliged to fulfill its promise? Explain your answer.

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Question 6

Paradise Publishing Inc entered into a contract with Carol Chambers, a successful author, for the writing of two novels.Under the terms of that agreement, Carol was entitled to payment of $50 000 six months after the submission of each novel.Carol submitted the first novel on the first day of January.As she found the first phase of the contract to be exhausting, she wanted to immediately take a vacation.She asked Paradise for payment of $50 000, but it pointed to the terms of their contract and denied her request.Carol purported to sell her contractual rights regarding the first novel to Nigel.Under that arrangement, Nigel immediately paid $35 000 to Carol in exchange for her right to receive $50 000 from Paradise on the first day of July.With the money that she received from Nigel, Carol took an extended vacation to Costa Rica.While relaxing on the beach, she met Jose, an aspiring author who explained that he was finding it difficult to break into the publishing world.Carol then proposed an arrangement under which he would pay $10 000 to her in exchange for the right to write her second contract for Paradise.Jose agreed.In the middle of May, Paradise learned about Carol's agreements with Nigel and Jose.It insists that both of those arrangements are invalid.Is it correct? Explain your answer.

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Question 7

Explain the relationship between offer and acceptance on the one hand and consideration on the other.Your answer should focus on the concepts of cross offers and mutuality of consideration.

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Question 8

Identify and explain two situations in which legislation allows a stranger to sue on a contract that was made for its benefit.

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Question 9

Under the Electronic Home Business Administration Act, any citizen that pays a $50 fee is entitled to receive a licence to operate a certain type of business from home.Donna, who wished to operate such a business, sought information over the telephone from Duncan, a government official who was responsible for issuing licences under the legislation.Duncan agreed to provide a licence to Donna, but only if she promised to pay an additional fee of $25 to him directly.Although Duncan was not actually entitled to demand that extra sum, he honestly believed that he was acting within his rights.Because she was anxious to receive the licence, Donna promised to pay $75.However, she now regrets her decision to do so.How much must she pay Duncan in order to receive a licence? Explain your answer.

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Question 10

"A promise to perform a pre-existing contractual obligation cannot provide consideration for a new contract.That rule is based on the fact that it would be undesirable if party A could threaten to break an existing contract in order to get party B to enter into a second agreement at a higher price." Is that statement true: (1) if the existing contract was created between A and B, or (2) if the existing contract was created between A and C? In each instance, provide two reasons for your answer.

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Question 11

Briefly describe the requirements that must exist before a promissory estoppel will arise.

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Question 12

Identify the circumstances in which an employee can take advantage of an exclusion clause that is contained in a contract that was created between an employer and a customer.

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Question 13

Koln Enterprises Ltd is a music publisher that manufactures compact discs.In January, it agreed to record a jazz concert for Jade Nagoya, a pianist, in exchange for payment of $25 000.The recording was to take place in April.Under the terms of that agreement, Jade would then be entitled to sell the CDs to her own customers for her own profit.As soon as that contract was created, Koln orally assigned its rights to Bremen Collection Inc.In February, Koln breached a separate contract that it had with Jade.As a result of that breach, it became indebted to her for $5000.It has not yet paid that amount to her.In March, Bremen notified Jade of the assignment that it had received from Koln.Koln recorded the concert in April and pressed it onto a set of CDs.When Jade received those discs, however, she noticed that while the sound quality was acceptable, the packaging did not satisfy the terms of her January agreement with Koln.As a result of the shoddy packaging, Jade lost $3000 on the re-sale of the CDs to her own customers.How much money is Bremen entitled to collect from Jade? Explain your answer.

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Question 14

What is the essential purpose of a seal?

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Question 15

Sebastien Johan is a music critic known for his ill-tempered manners.In a recent newspaper article, he harshly criticized a classical recording that was released shortly after the death of Glenn Klavier, its featured performer.Johan's review attacked Klavier's music, which was not unusual.However, the review also attacked Klavier personally.It unfairly and inaccurately suggested that Klavier had intentionally stolen all of his ideas from another pianist.Klavier's widow sued Johan under the tort of defamation on the basis that the review tended to make people think less of her late husband.She threatened to sue for $500 000 unless she immediately received payment of $100 000.Although Johan normally would have simply ignored the matter, he recently had experienced a number of financial setbacks.He therefore realized that while he would prefer to pay nothing, he could afford $100 000, but would be ruined if he was ever required to pay $500 000.He therefore promised to pay $100 000 within one year to Klavier's widow in exchange for her promise to drop the lawsuit.Six months later, however, Klavier's widow was reliably informed that her lawsuit certainly would have failed if it had been brought before a judge.The law of defamation states that a person cannot be held liable for making derogatory comments about a dead person.Johan therefore now refuses to fulfill his promise to pay $100 000.Is he entitled to do so? Explain your answer.

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Quiz 8: Consideration and Privity