Exam 8: The Requirement of Consideration

X owed Y a debt in the amount of $1,000. The debt was payable on June 1^st. If X offered Y the sum of $900 on the due date as payment in full, at common law, Y would be entitled to collect the remaining $100 even though he accepted the lesser sum as payment in full on the due date.

The act of performing a contract or the offer of payment of money due under a contract is known as a(n):

X owed Y a debt in the amount of $1,000. The debt was payable on June 1^st. If Z, a friend of X, paid $900 to Y as payment in full of the debt owed by X, and Y accepted the sum, Y could not later demand the remaining $100 from X.

McSweeney agrees to clear out Brown's basement, but no price is set at the time. Brown argues, once McSweeney has done the work, that since no price was agreed upon he should pay only a reasonable price and not the excessive amount stated in the bill presented to him by McSweeney. He is right.

Quantum meruit and quantum valebant are two legal doctrines which result in essentially similar outcomes.

Jeremy agrees not to sue Angela for having crashed into his car if she agrees to pay for his repairs. Since he only promised not to do something which he could have done, he has not given consideration for her promise to pay.

In a letter to his nephew, Peter, Mortimer promised to leave Peter all his money when he died in memory of Peter's father for whom Mortimer had great respect. There is nothing Peter could do to ensure that Mortimer will keep his promise since it is gratuitous, and a gratuitous promise can never be made enforceable.

Ted rented a store in a mall owned by Oscar. During the two busiest months of the year, renovations to the stores on either side of Ted's caused him to lose a great deal of money. A clause in the commercial lease for the store says that the mall owner is not liable for any losses caused by repairs or renovations, but Oscar agreed to allow Ted to pay only two-thirds of his rent for the following six months because Ted was now in financial difficulties since he had not made the profits he relied on to carry him through the slow period. Three months later, Oscar lost a lot of money speculating in the commodities market and he told Ted that he needed Ted to revert to paying the full amount of the rent under the lease. Ted objected having put all the money he would have used to pay the rent in full into an advertising campaign to try to make up his losses. Oscar got angry and demanded that Ted pay the back rent also. Ted will go bankrupt if he has to do this and he comes to you to ask if he must do it. What will you tell Ted about Oscar's rights and what Ted can do about the situation?

Jane agreed to look after Colin's dog in February if he would look after her cat in May. In May, Colin refused to look after Jane's cat. Did Colin breach a contract?

A bicycle repair shop replaced a wheel on Zoe's mountain bike after she had run over a nail in the street. The repairman said that, although the new tire was not the same brand that had been on the bike when she bought it, not only was it of better quality and would be dependable, it was less expensive too. As Zoe biked down a busy street the tire tube popped causing her to lose control and fall into traffic. She suffered broken bones and internal injuries resulting in lost pay at work. Zoe's lawyer suggested using estoppel as grounds for her case. Which of the following are elements upon which estoppel can be used to argue her case?

Under the Civil Code of Quebec, a contract ___________________ consideration to be enforceable.

Charlie looks after Brad's motorcycle shop for a weekend, and, on Brad's return, Brad promised to give Charlie $200 for his kind act. In this case, Charlie's act of looking after Brad's shop was gratuitous and past consideration for Brad's later promise of payment. If Brad fails to pay the $200, no contract exists for Charlie to enforce because no consideration can be shown except the past gratuitous act.

A small company, Software Design Limited, was indebted for $150,000 to a sole individual, and it is now due. This individual was an investor who was a former classmate of the firm's president, Angela. Owing to a reversal of fortunes for the company, Software Design could now only repay $100,000. With her investor chalking the affair up to experience, Angela intended the firm to repay what it could now, and then she would wind up the company. A few weeks after paying off her creditor at $100,000, but before she could wind up the company, a new investor with both ideas and money approached her and encouraged Angela to continue on in the business. Once Angela's former classmate heard of the new investor, she demanded the balance due on her loan. Angela briefly considered repaying more, but her new investor demanded a hardline approach. Angela was holding the repaid note in her hands as her later investor said "Neither you nor she could see the future when she agreed to accept $100,000. But accept she did. Business is business."

Simon is told by his lawyer that a particular document must be signed under seal. When Simon questions whether that isn't cruelty to animals, his lawyer explains that this is simply a process by which a written document can be made binding even if there is no consideration present.

Mr. Ying, a successful lawyer, is asked by his daughter's daycare to do their legal work on a voluntary, unpaid basis and, since it is minimal, he agrees. As the result of an error he makes in drawing up the daycare's standard employment contract, a mistake which would not have been made by the reasonable lawyer, the daycare has to compensate an employee who was let go for failure to meet the job requirements. Since Mr. Ying received no consideration for his work, the daycare cannot hold him liable in contract for its loss.

Jane looked after Colin's dog in February. In May, Jane went away and asked Colin, in return, to look after her cat. Colin refused. Did Colin breach a contract?

X owed Y a debt in the amount of $1,000. The debt was payable on June 1^st. If Z paid $900 as settlement for the debt owed by X to Y, Z would be entitled to an assignment of the debt owed by X and could collect the debt from him.

Mary Jo relied upon a promise made to her by David. As a result of David's failure to fulfill the promise, Mary Jo has incurred expenses for which she cannot now be compensated. She tells you that she wants to sue David and make him live up to his promise. You would be right if you told her that she would have a better chance of succeeding if she were in the United States.

Anderson, a city employee, collected garbage along Smyth's street on Thursday of each week. One day Smyth said to Anderson: "You have done such a good job; I will give you $10 when you come by next week." The next week, when Anderson made his regular garbage pickup for the city, he met Smyth and asked for the $10. Smyth refused to pay. The reason why Anderson would be unable to show consideration is that, as a city employee, he was already bound to collect Smyth's garbage as a part of his duty to his employer.

One afternoon you find a notebook filled with incomprehensible mathematical notations outside the Faculty of Business building and, realizing that it belongs to a professor in the Philosophy Department whose name is on the cover, you put it under the door of his office with a note telling him that you found it. That night, on the eleven o'clock news, you see an interview with the professor who is telling the reporter that he has lost the notebook in which he had worked out the meaning of life, and you hear him offer $10,000 for its safe return. Discuss your legal position in relation to whether or not you can claim the reward if the professor refuses to pay you.