Chapter 12

Mary agrees to sew Georgia's prom dress for $50 plus costs. Georgia decides that she wants ruffles around the neck and calls Mary who says it will now cost $60. When Mary finishes the dress (with ruffles), Georgia must pay:

$60, since the modified agreement is supported by additional consideration.

Which of the following would most likely be enforceable?

A substitute agreement to settle an undisputed debt.

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.

The manufacturer is obligated to use his best efforts to supply the goods even if no such clause appears in the written franchise agreement. Roberto has an implied obligation to use his best efforts to promote the sale of the widgets. Under the UCC, such an agreement lacks consideration. A AND B

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.

The parties have agreed to a substitute contract which discharges the original contract. John is obligated to pay the additional $1,000.

Which of the following would not be enforceable without additional consideration?

The settlement of an undisputed debt.

Howard 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 for $179.99. Howard called the store and demanded the advertised price. They say okay.

Howard must pay $179.99

Harold purchased 400 pairs of gloves from Isaac at a contract price of $800. Fifty of the gloves were defective and a dispute arose as to the amount due and owing under the contract. Harold refuses to pay the $800 and Isaac is threatening to sue. Which of the following is correct with regard to this transaction?

If Isaac agrees to accept $600 to settle the dispute and Harold agrees to pay that amount, the agreement is enforceable.

Jason's mother would like him to go to college, so in June he enrolls at the local university. He also quits his job and tells his mother his plans to take 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?

It is unenforceable, because Jason had already enrolled in school when she made the statement that she wanted to pay for his books, and there is no consideration.

Jan promises Eli $4,000 for one of his original paintings on the condition that she receives $1 million from her mother's will. In this case:

Jan's promise is legally sufficient unless Jan knows she cannot inherit the $1 million.

Which of the following would not be a promise statutorily made enforceable without consideration?

Jones promises to pay his cousin's past-due cell phone bill.

Nancy, who lives in Birdville, wants to open a McHenry Roast Chicken franchise. Mark, a representative of McHenry, told Nancy, "If you will buy a lot and build a building in River City, we will give you a franchise." Nancy bought the lot and built the building as instructed only to discover that McHenry had awarded the franchise to a large corporation. McHenry claims no liability to Nancy since there was no consideration. Which statement best describes the situation?

McHenry is liable to Nancy based on the concept of promissory estoppel.

Shane contracts to build a garage for Bob for a price of $6,000. Because of an increase in the cost of labor and materials, Shane refuses to perform. Bob wants the garage, so he agrees to pay an additional $500. In this case:

Shane has given no additional consideration, and under the common law he must perform at the agreed-upon original price.

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. Edward agrees.

The consideration from Darla to Edward is the promise of $6,000 subject to a condition.

Which of the following statements best describes charitable subscription promises?

They are generally enforceable if there is reliance or a probability of reliance by the charity.

Marilyn contracted with Bravo Builders to build an addition to her house for $15,000. After digging the foundation, Bravo decides that it will take more work and more concrete than it had originally thought and that it will need to charge an additional $5,000 for the job. Assuming Marilyn agrees, which of the following is correct?

This is a modification of a preexisting contract, which under common law must be supported by additional consideration on the part of Bravo Builders.

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?

Yes, because Robbie gave up a legal right.

Which of the following is enforceable without consideration?

A new promise to pay a debt barred by the statute of limitations.

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?

Yes, because the early payment of the loan is consideration that makes the bank's promise binding.

Which of the following will often not constitute valid consideration?

An illusory promise

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?

An off-duty deputy sheriff from a county other than the one where the arrest occurred.

Andrew agrees to paint Rosalene's house for $500. Two days after he starts the job, he decides that $500 isn't enough money. He refuses to finish the job, unless Rosalene agrees to pay him $100 more. What principle applies to this fact situation?

Andrew was already obligated to paint the house. He gives no additional consideration in return for Rosalene's promise to pay more money.

Jack moved from New Hampshire to Florida and decided to have an air conditioner installed in his car. After it was installed, Jack received a bill for $1,200. Jack called the dealer and told him he'd never heard of this service costing more than $500. They argued, but the dealer finally agreed to take $900. Is the agreement enforceable?

Yes, there is consideration for the modified amount.

Alice says to Brian, "If I decide to buy a word processor next year, I will buy it from you." This is an example of:

an illusory promise

An undisputed debt is:

an obligation that is not contested as to its existence or amount.

Barbara, a wealthy widow, promises the pastor of her church that she will donate $10,000 to the church to help pay off its mortgage if the stewardship committee can obtain enough pledges for the balance of the $30,000 mortgage. Other pledges are obtained to pay off the mortgage, but now Barbara has changed her mind and plans to take an around-the-world cruise instead. Barbara's promise to pay $10,000:

is enforceable under the Restatement of Contracts.

There are certain transactions that are enforceable without consideration. These include:

promises to pay a debt barred by the statute of limitations. a promise to pay a debt that has been discharged in bankruptcy if certain requirements are met. a new promise to perform a voidable obligation that has not previously been avoided. ALL OF THE ABOVE

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

there was no consideration for the stock option, and promissory estoppel did not apply because detrimental reliance was not proven.

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

Bargained-for exchange and legal sufficiency.

Which of the following is enforceable without new consideration?

Beth, after reaching the age of majority, promises to pay off a debt she incurred while a minor.

Wayne helped Hank study all night for an important exam. After Hank got an "A" on the exam, he told Wayne, "I will give you $10 for helping me get a good grade." Wayne said, "Thanks, I'll take it."

There is no contract because there is no valid consideration.