Exam 12: Consideration

Fran negligently drove her truck through Nick's fence,causing damage.If she promises to pay Nick $1,500 if he does not bring a lawsuit against her,Nick accepts and forms a unilateral contract by not filing suit.His forbearance is consideration.

Which of the following are the two basic elements to consideration?

The element of exchange is absent where a promise is given for an act that has already been done.

If Walter agrees to sell to Caleb all of the tomatoes he wants at $25 a bushel,there is a valid contract with valid consideration.

Carlos ordered an aluminum storm door for $249.99.Before it was delivered,the same store from which he ordered the door ran an ad in the paper for the same storm door at $179.99.Carlos calls the store and demands the advertised price.If the store agrees:

William agrees to drill a well up to 200 feet deep for John's rural cabin.The contract price is $3,000.After drilling 100 feet,William strikes solid granite rock.He talks to John and explains that this is highly unusual for the area and could not have been anticipated at the time of entering into the contract.He offers to get a special drill,but says it will cost him more money,so that he will be unable to complete the project for the agreed price.Because John is anxious to have the well,he agrees to pay William an additional $1,000 to complete the job.However,once the well is finished,he changes his mind and now says he will pay only the originally agreed-upon amount.In this case:

Under the common law,in order to be enforceable,a modification of an existing contract must be supported by mutual consideration.

The adequacy of consideration,while not important to the existence of consideration,may be relevant to the availability of certain defenses or remedies.

An exclusive dealing contract is one type of contract which is illusory because it lacks consideration.

Sandy's private secretary promises to keep the contents of a letter she typed secret if Sandy will give her the next day off with pay.If the secretary takes the day off,Sandy has to pay her for the day.

Janet promises Eli $4,000 for one of his original paintings on the condition that she receive $1 million from her mother's will.Janet has made:

The performance of a pre-existing contractual duty which is neither doubtful nor the subject of an honest dispute is legally sufficient consideration to support a second contract.

The parties to a contract may modify the agreement with no additional consideration by simply substituting a new contract.

A few states provide by statute that the parties need to provide no new consideration when modifying any contract.

Contracts binding without consideration include promises to pay debts barred by a statute of limitations and debts discharged in bankruptcy.

If a promise is illusory,there is no mutuality of obligation.

A modification of a preexisting contract occurs when the parties agree to change one or more of its terms and,under the common law,must be supported by mutual consideration to be enforceable.

Jason's mother would like him to go to college,so in June he enrolls at State University.He also quits his job and tells his mother his plans to continue taking classes.His mother says,"I'm so happy that you are going to college that I want to pay for your books." Jason then sends her a bill for $485.Which of the following is true regarding his mother's promise?

Past actions that were not bargained for by the parties can become valid consideration for a contract.

Sue owes $5,000 to the First National Bank for a student loan which will come due on January 1 next year.She has been offered a two-year graduate fellowship,but she will not be able to pay the loan back if she accepts the fellowship.The bank manager tells Sue that if she pays $3,000 now,they will forgive the loan.Should Sue accept the offer?