BUS-2030 Chapter 13: Consideration

what elements are required for the promissory estoppel doctrine to apply?

1. there must be a clear and definite promise 2. the promisor should have expected that the promise would rely on the promise 3. the promisee reasonably relied on the promise 4. the promisee acted or refrained from some act 5. the promise suffered some type of harm 6. enforcement of the promise is necessary to avoid injustice

shockingly inadequate consideration can indicate the existence of what exceptions?

1. undue influence 2. duress 3. fraud

Alonzo graduates with a 3.8 GPA in Accounting from a New York university and receives offers of employment from three of the Big Four accounting firms. While considering his options, a mid-sized firm in California calls and offers him twice the starting salary of his top offer. The only caveat is he needs to show up at the Los Angeles office within the next week to start work immediately. Alonzo excitedly decides to take the California job. He refuses the other employment offers, breaks his lease in New York, sells or gives away most of his possessions, buys a new car, and heads for L.A. the next day. When he arrives at the Los Angeles office three days later, the firm apologizes and informs Alonzo that the position is no longer available due to the loss of a major client.

Alonzo could bring a claim against the firm on the theory of promissory estoppel

Amy, a baker, has found her dream home but cannot afford the down payment. Amy's brother agrees to loan her $30,000 for the down payment, and Amy agrees to pay him back in one year. Next year, Amy offers to bake her brother's wedding cake for his wedding next month instead of paying back the loan, so that she can buy new equipment for her bakery. Amy's brother agrees. How much money does Amy owe her brother?

$0, because an agreement to accept different performance in lieu of full payment of liquidated debt is binding

a preexisting duty might exist because of (1) and a duty imposed by law

(1) a duty imposed by a previous contract

in the interest of fairness and equity, the courts may allow an exception to the preexisting duty rule when (1)

(1) contract performance involved unforeseen difficulties

when all of the requirements are met to state a claim under the doctrine of promissory estoppel, the promisor will be (1) the lack of consideration as a defense

(1) estopped from asserting

something of legally sufficient value may consist of the performance of an action that one is otherwise not (1) to undertake. Something of legally sufficient value may consist of the (2) from an action that one has a legal right to undertake, called a forbearance

(1) obligated (2) refraining

something of legally sufficient value may consist of a promise to do something that one has no (1) legal duty to do

(1) prior

consideration can be defined as (1)

(1) something of value given in exchange for a promise

liquidated debt

a debt that is due and certain in amount

unliquidated debt

a debt that is uncertain in amount

rescission

a remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made

if two parties substitute a new contract for an old one and the court finds that there was a preexisting duty, then the new contract will be invalid because there was no consideration

true

Bryan tells his friend Jane, "I don't think it's fair that you don't have a cell phone and the rest of our friends do. In consideration of that unfairness, I will pay you $400 for you to buy a new phone." This contract is:

unenforceable, because it is not a bargained-for exchange

Jackie agrees to pay Ben $1,000 if Ben agrees to not go skydiving for six months. After Ben avoids skydiving for six months, he asks Jackie for payment. Jackie declines to pay Ben the $1,000. The contract between Jackie and Ben:

will be enforced because Ben exercised forbearance, which is legally sufficient consideration

Yolanda's parents tell her that if she builds a house with her own funds on land that they own, they will give her the land. If they refuse to do so after Yolanda finishes the house, she will NOT be able to use the doctrine of promissory estoppel, because it does not apply to family disputes.

false

if a promise is made without consideration:

it can sometimes be enforced

Sergio contracts to hire Belinda to work for him at $3,000 per month, reserving the right to cancel the contract at any time. Two days before Belinda is scheduled to start work, Sergio exercises his option-to-cancel clause. Will Belinda be successful in a lawsuit against Sergio?

no, recuasse the promise was illusory and, therefore, unenforceable

Kenneth's parents own a cattle ranch. When they become too elderly to run the ranch by themselves, Kenneth moves back to the ranch to help them. With his parents' help and permission Kenneth builds a house on the ranch. After he builds it, his parents refuse to deed him the land. Kenneth can sue his parents under the doctrine of:

promissory estoppel

Francisca collides with Wyatt's car. Francisca writes Wyatt a letter offering to pay Wyatt $10,000 if he agrees to forfeit all of his rights to pursue a lawsuit. If Wyatt agrees and signs the letter, Wyatt will have agreed to a(n):

release

past consideration

something given or some act done in the past, which cannot ordinarily be consideration for a later bargain

Helena shares with her family her two goals for her senior year in college: join a synchronized swim team and shoot a bald eagle. Helena's cousin Anika is concerned about the utility of both of these goals and urges Helena to spend the year looking for a job, promising, "If, upon graduation, you have secured a job, have refrained from synchronized swimming and shooting bald eagles, I will give you $10,000." Helena immediately accepts the terms of the agreement and at graduation has met all three criteria, but Anika refuses to pay. What argument will be most helpful for Anika in court?

the element of the agreement about the bald eagle is not enforceable because shooting bald eagles is illegal

Carmen agrees to cook twenty dinners for Hal. In exchange, Hal will repair all of the plumbing in Carmen's house. Carmen has offered legally sufficient consideration because Carmen has promised something of value.

true

Carol Rogers, a local millionaire, promises to donate $500,000 to the Springfield Humane Society, which the society plans to use to build a new animal hospital. Based on Carol's promise, the society begins work on the hospital. Carol then backs out of her offer.

Carol can be sued for the money under a theory of promissory estoppel

Melnick built a house for Gintzler, but the foundation was defective. Gintzler agreed to accept the foundation if Melnick guaranteed to repair any damage that was caused by the defects in the future. Melnick agreed, but when Gintzler called Melnick two years later to repair water damage resulting from the foundation defects, Melnick refused to make any repairs. Gintzler sued, and Melnick argued that his promise to make future repairs was unsupported by consideration. Who will win the suit?

Gentler will win, because he gave consideration

Constance tells Jill, her best employee, "Your work is so good, if I like what you do over the next six months, I'll give you a $1,000 bonus." Constance does not give Jill the bonus, so Jill sues. Most likely:

Jill will not win, because this is an illusory promise without consideration

Les agrees to install a new hard drive and software on Marilee's computer in exchange for four of her used textbooks. After he installs the hard drive, Les says he won't install the software unless Marilee gives him two more books. What legal position are the parties in now?

Marilee can sue for breach of contract, because Les had a preexisting duty to do all of the work

when a debtor offers to pay for a disputed debt a lesser amount than the creditor originally claimed was owed, and a creditor accepts, the agreement is called:

an accord and satisfaction

Maybelline falls down a well and is saved when her neighbor Ruben makes a very daring rescue. Ruben hoists her to safety, and Maybelline hugs him and promises him a check for $100,000 for his kindness. Ruben is delighted and when Maybelline visits him the next day and again mentions the $100,000, he tells her that he is going to quit his job as a preschool music teacher and use the money to start a business. Two days later he resigns from his job and calls Maybelline to ask when he can expect his money. He is startled when she replies that she is not going to give him a cent. Will a court enforce Maybelline's promise?

yes, because Ruben relied on the promise