Exam 12: Consideration

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

The UCC provides that a contract for the sale of goods cannot be effectively modified without new consideration.

"Consideration" requires an actual benefit to both sides of an agreement.

In a unilateral contract, a promise is exchanged for an act or forbearance to act.

Darla offers to pay Edward $6,000 for Edward's car, provided that Darla receives that much from her uncle's estate, which is currently being probated.She expects to know for sure how much she will receive within a week or so.If Edward agrees:

Jerry received a bill for $300 from Johnson for a tune-up Johnson had performed on Jerry's car.Jerry called Johnson and told him, "The car runs no better now than before the tune-up.I am sending you $100 and no more." Johnson received the $100 check which was marked "paid in full" and cashed it.Jerry is still liable to Johnson for $200.

Breton owes Parkerson $750, which is due on June 1.Discuss the sufficiency of consideration if Breton offers Parkerson: (a) $600 in full settlement on June 1 if the debt is undisputed; (b) $600 in full settlement on April 10 if the debt is undisputed; and (c) $500 on June 1 to settle the debt if the amount of the debt is validly disputed.

An output contract is a special form of an illusory contract.

In DiLorenzo v.Valve & Primer Corporation , the court held:

Discuss the concept of adequacy of consideration.

Ken, a research chemist, has been promised a fellowship with a stipend of $20,000 to do research on synthetic fuel oil.Under the terms of the fellowship, Ken is free to use the money as he sees fit.Ken decides to build his own laboratory, so he will not have to rent one.He hires a carpenter who begins working on shelving and cabinets in the laboratory.Then Ken receives a telegram saying the fellowship has been canceled.No reason is given for the cancellation.If Ken sues, will he be able to collect the money from the foundation which promised the fellowship? Explain your answer using legal terminology.

In the Pearsall v.Alexander case, the court found that by exchanging mutual promises to share in proceeds of lottery tickets, the parties entered into a valid, enforceable contract.

Roberto obtains an exclusive franchise to sell widgets for the Acme Widget Company.The exclusive franchise covers the entire State of Wisconsin for a period of three years.In this case:

Andrew agreed to exchange something clearly without value to enter a contract with Milt.The contract will not fail for lack of consideration because, if the parties agree to the exchange, the courts will not be concerned about whether the consideration is "adequate."

Aunt Ellie promises her 21-year-old nephew, Robbie, that she will pay him $100 if he quits smoking for a month.If Robbie does, is there a binding contract?

Define a substituted contract and explain how it affects an agreement.

In a unilateral contract, a promise is exchanged from one party to another for a promise to forbear to act.

Bob promises to sell to Candy an automobile for $20,000, for which Candy promises $20,000.A unilateral contract exists.

Andy's private secretary promises not to disclose the contents of an email she typed if Andy will give her the next day off with pay.If the secretary takes the day off, Andy does not have to pay her for the day.

A bank robbery has occurred, and the banker's association has offered a $1,000 reward for information leading to the arrest and conviction of the robber.Several people are claiming to be entitled to the money.Which of them is eligible?