Exam 11: Consideration and Promissory Estoppel

Discuss whether the agreements reached in each of the following situations is enforceable. a.Mark is the owner of A-1 Construction.He agrees to construct an addition to a client's home for a total contract price of $45,000.When the addition is completed,the homeowner complains about the quality of the workmanship and refuses to pay the full contract price.Mark talks to the homeowner and Mark agrees to accept a payment of $43,000 rather than the $45,000 in the original contract. b.Mark is the owner of A-1 Construction.He agrees to construct an addition to a client's home for a total contract price of $45,000.When the addition is completed,the homeowner says he is short of money and can only pay Mark $43,000 even though he is satisfied with the work.Mark agrees to accept the payment.

Consideration can best be described as:

Something of "legal" value must be given to support a contract.

Buyer executes a requirements contract with seller for the next year.Which statement is true?

Two friends,Ann and Mary,are having margaritas at happy hour.There had been no discussion of who would pay for the drinks.After the third round of drinks,Ann said,"I will pay for everything tonight including your drinks." A couple of minutes later,Ann says,"I've changed my mind.I just remembered that they might be having layoffs at my job tomorrow." Mary wants to force Ann to perform on her promise and threatens to sue.In this circumstance,a court would:

A promise to refrain from underage drinking in exchange for $10,000:

Requirements contracts are not valid contracts as they are illusory.

Bigbyte is a manufacturer of personal computers.Bigbyte has agreed with Max Harddrives to purchase from Max "all the hard-disk drives we need if we determine that your hard drives will meet our needs in our manufacturing of computers." Bigbyte does testing of the Max drives and other drives of competitors.Bigbyte determines that the drives made by another manufacturer perform somewhat better.Bigbyte then sends a letter to Max stating that "unfortunately we have determined that your drives do not meet our needs and we have decided to purchase elsewhere." Max Harddrives wants to force Bigbyte to stop purchasing disk drives from other manufacturers.Discuss the legal issues.

Frank is a loyal employee who has spent much time above and beyond the call of duty promoting his employer's company on weekends.Frank's boss says to him,"Because of all this extra work you have done,you'll get a $1,000 bonus next month." Because of this statement,which of the following is true?

Seasonal Selections,Inc.enters into a contract with Arthur's Tree Farm to purchase all of the balsam fir tree boughs that it will need to make Christmas wreaths for the Christmas season.This contract is:

An illusory promise is:

Cheryl hired Golden Construction Co.to build a house for her.The plans for the house were complex,and expert workmanship was required.After the house was completed,Cheryl liked it so much that she promised to pay Golden a $4,000 bonus.Later,Golden demanded the money,but Cheryl refused to pay it.Golden sues.What is the most probable result?

A preexisting duty can arise from a person's job or position,or it can arise out of an existing contract.

In a two-party contract,which is true about consideration?

Ricky signs a 2-year contract to play basketball for the Jolters,for $100,000 per game.Right before a big game,Ricky goes to the owner and says that he will not play unless the owner pays him an additional $5,000 per game.The owner,being desperate,agrees.Now that the season is over,Ricky demands his additional compensation,but the owner refuses to pay.Ricky sues.Which of the following is most likely?

Which of the following constitutes legal consideration?

Most airline frequent flyer programs contain clauses allowing the airlines to change award levels (e.g.,requiring more miles to get a free ticket)or to even cancel the program and all earned benefits without any compensation to the passenger.Is there any problem with consideration here?

Henry had worked for a local medium-size manufacturer for over 30 years.A couple of weeks before he retired,the company director of human resources told Henry that the company would pay for health insurance for Henry and his wife for the remainder of his life,and for his wife's life if she were to survive him.He then received a letter from the company describing this.Henry had always known that the company provided this benefit to a few of its select employees.Henry didn't really expect that he would receive it,although he had secretly hoped so for some time.Four years after retirement Henry contracted cancer and incurred substantial medical bills under his insurance plan.Henry then received a letter from his former employer saying that the employer was discontinuing its payment of health insurance for those retirees who were receiving this benefit.Henry is considering suing the company to force it to live up to its agreement.Discuss the issues and likely resolution of Henry's case.

Which of the following can be considered consideration?

Frieda is at a Denver Broncos Football game,and she is being bothered by several extremely drunk spectators in nearby seats.She asks a security officer to do something,but the security officer refuses.She then offers the security officer $100 if he'll stop the problem.He agrees,then warns the drunk spectators,after which the problem stops.Frieda refuses to pay the security officer.Is there sufficient consideration in this agreement?