BUL3310 Chapter 15

Promissory estoppel is best described as

An equitable remedy when one party suffers an unbargained-for detriment.

Which of the following is not an element of promissory estoppel? There must be an underlying enforceable bilateral contract. The promissor must foresee that the promissee would rely on the promise. The promissee did in fact reasonably rely on the promise. The promissee suffered a loss because of the reliance.

All of the above are elements of promissory estoppel.

Which of the following statements is true about modifying contracts governed by the Code? No new consideration is required to modify an existing contract. Modifications must be made in good faith Parties may agree that all modifications to an existing contract must be in writing.

All of the above are true statements.

Consideration in a bilateral contract always involves both

A legal benefit and a legal detriment

An accord and satisfaction can be used to settle both liquidated and non-liquidated debts.

False

An illusory promise is consideration for a unilateral contract, but not for a bilateral contract.

False

Courts do not enforce output contracts as a matter of public policy.

False

Legal detriments always entail economic losses.

False

Mutuality of consideration is a requirement for a (n)_________________.

Bilateral contract

Nominal consideration on is another term for sham consideration.

False

Promissory estoppel is the contract doctrine that requires that accords be in writing.

False

Customer ordered fried chicken strips at the drive-in window of Famous Burger. One of the "strips" turned out to be an entire chicken head, battered and deep fried. Famous Burger tested the head and found that it was, indeed, cooked in their batter and in their oil. Pictures of Customer with the fried head showed up in newspapers and on the Internet. Famous Burger offered Customer a cash settlement in exchange for Customer's promises not divulge the amount of the settlement, sue Famous Burger over the incident, or ever speak of it in public again. Agreeing not to exercise these three rights in exchange for the settlement is an example of ____________________.

Forbearance

Bay Crab Processor has a contract with Jim, a local crabber, to buy all the crabs Jim catches during the season for $35 per bushel. This is an example of a (n) ___________contract.

Output

An illusory promise is created when

The promise is conditional on an event happening first that is totally within the promissor's control.

In an accord and satisfaction, the accord is

The substitute agreement

Famous Chef told Shrimp Boat Captain: I will buy your catch if I think the shrimp are large enough." What is the status of this promise?

This is a valid promise because the chef must make the decision in good faith.

Courts may look into the adequacy of consideration if there is evidence of fraud or undue influence by one of the parties.

True

Giving up the right to do something that one is legally entitled to do can serve as consideration in a contract.

True

In a liquidated debt, the parties agree on the exact amount that is due.

True

In bilateral contracts, both parties must be bound to the contract or neither party is bound.

True

Parties to a contract may not offer as consideration promises to do what they are already legally required to do.

True

To meet the element of consideration, each party to a contract must gain a legal benefit and incur a legal detriment.

True

Under the Code, parties may agree to modify the terms of an existing contract without providing new consideration.

True

Under the common law, modifications to existing contracts required new consideration from each party.

True

Which of the following is an example of an unliquidated debt?

A bill sent to homeowner by contractor for an additional $500 for cost overruns: owner claims he will pay only $250.

Which element of a contract is met by a bargained-for exchange?

Consideration

Another term for promissory estoppel is

Detrimental reliance

Which of the following statements is true about an accord and satisfaction?

It can be used for unliquidated debts based on contract or tort claims.

Benny bought shares in Big Chip Maker (BCM) when the shares were trading for $37 a share. For the past 9 years BCM shares have not traded above $21. Can Benny rescind his purchase based on failure of consideration?

No, unless he was induced into buying the shares through fraud or other wrongdoing.

Which of the following is false about a renunciation?

Renunciations are valid in common law but not under the Code

Big Oil Company has a contract with homeowner to deliver however much heating oil homeowner needs for the fall and winter seasons. This is an example of a (n) __________________contract.

Requirements

A renunciation is a written waiver of a right arising out of a contract.

True

Promissory estoppel is often used in which of the following business situations?

When a contractor submits a bid in reliance on the bids of his subcontractors.

Local Delivery Service had a one year contract with Supply Co. to make four deliveries a month to Supply's customers who live across the Bay. There is only one bridge spanning the Bay for 200 miles in each direction. Without warning, the state closed the bridge to all traffic for 10 months after an inspection revealed dangerous structural problems. Local now has to travel an extra 400 miles for each of the scheduled deliveries. Local asked Supply Co. for an additional $60 per trip above the contract price and Supply Co. agreed. Under common law, is this an enforceable contract?

Yes, the request is made in good faith for an unforeseen difficulty

Which of the following statements about nominal consideration is correct?

a and b are true