Exam 8: Consideration and Privity

Paradise Publishing Inc entered into a contract with Carol Chambers,a successful author,for the writing of two novels.Under the terms of that agreement,Carol was entitled to payment of $50 000 six months after the submission of each novel.Carol submitted the first novel on the first day of January.As she found the first phase of the contract to be exhausting,she wanted to immediately take a vacation.She asked Paradise for payment of $50 000,but it pointed to the terms of their contract and denied her request.Carol purported to sell her contractual rights regarding the first novel to Nigel.Under that arrangement,Nigel immediately paid $35 000 to Carol in exchange for her right to receive $50 000 from Paradise on the first day of July.With the money that she received from Nigel,Carol took an extended vacation to Costa Rica.While relaxing on the beach,she met Jose,an aspiring author who explained that he was finding it difficult to break into the publishing world.Carol then proposed an arrangement under which he would pay $10 000 to her in exchange for the right to write her second contract for Paradise.Jose agreed.In the middle of May,Paradise learned about Carol's agreements with Nigel and Jose.It insists that both of those arrangements are invalid.Is it correct? Explain your answer.

Because he was in love with her,Noriel promised to sell his car to Marina for $500 and Marina agreed to pay $500 for the car.At the time of that agreement,Marina stressed that the deal was purely commercial and made it clear that she did not share Noriel's hopes for an intimate relationship.Before the sale was performed,Noriel fell in love with another woman,Valerie.He therefore now refuses to transfer the car to Marina.The actual market value of the car is $7500.Which of the following statements is TRUE?

Stacy hires Youssef to build her home.Youssef gets five of his friends to build the house,writing an agreement between them and him.He also sends a letter to Stacy informing her of the situation.Which of the following is true?

Luke threatened to sue Leia for $50 000 unless she immediately paid $30 000 to him.Leia paid $30 000 as requested.Luke is entitled to keep that money even if Leia later proves that he never honestly believed in the validity of the lawsuit that he threatened.

Which of the following statements is TRUE?

The doctrine of promissory estoppel operates only if the representee relies upon a statement made by the representor.

As a result of her participation in a telemarketing scheme,Susan was charged with several counts of fraud.Because she knew that the courts had recently started to take a much harsher approach to such crimes,and because she already had been convicted for similar offences in the past,she was anxious to "beat the rap." She therefore called Anqwaan,her brother-in-law,who was also a lawyer,and begged for his help.Anqwaan initially hesitated.Anqwaan already was very busy with his practice.Furthermore,although they were related,Anqwaan had met Susan only a few times and he did not know her much at all.He did,nevertheless,eventually agree to take on the case.As a result of his excellent service,Susan was acquitted on all charges.A few days after the trial ended,Anqwaan sent Susan a bill for his legal services: $15 000.As a family courtesy,Anqwaan had,in fact,charged Susan only half of his usual hourly rate.Susan nevertheless was very upset.As she correctly notes,she and Anqwaan had never discussed his fee and she had never actually promised to pay him anything.Which of the following statements is TRUE?

"Depending upon the circumstances,a promise to pay a specific sum of money may or may not be enforceable if that promise is given in response to services that have already been received." Explain whether or not that statement is accurate.

Past consideration does not satisfy the requirement of mutuality of consideration but can satisfy an obligation in certain circumstances.

Identify the circumstances in which an employee can take advantage of an exclusion clause that is contained in a contract that was created between an employer and a customer.

Alpha Manufacturing enters into a carriage contract with Bravo Shipping.During the carriage,a mistake by a contracted stevedore caused Alpha's goods to be damaged.Alpha had property insurance on the goods.Which of the following describes the situation?

The word "estop" means

Ash is moving from Canada to the UK,but before he goes he wants to buy his sister,Sasha,a ring.He finds a custom jeweler,but the ring will not be ready until after he leaves and he's worried that something might happen with the jeweler.Ash should

Dunlop sold tires to Mew.The parties' contract prohibited Mew from reselling the tires unless its sub-buyer agreed to abide by Dunlop's list price for the tires.Mew resold the tires to Selfridge.Under its contract with Mew,Selfridge agreed to (1)abide by Dunlop's list price,and (2)pay $50 to Dunlop for each tire that it sold in violation of that list price.Selfridge resold 10 of the tires to its own customers for less than Dunlop's list price.Which of the following statements is most likely TRUE?

Bruce and Rosie entered into an agreement.He promised to transfer a necklace to her mother and she promised to deliver a computer to his father.Which of the following statements is most likely to be TRUE?

Sarah was an orphan.Her uncle Rocco agreed to act as her guardian until she became an adult.In that role,he borrowed money to pay for her education.She promised to repay him when she became an adult.Sarah later became an adult and married Stepan.Stepan also promised to repay Rocco for the money that he had spent on Sarah's education.Sarah and Stepan,however,now refuse to pay the money.Rocco has sued Stepan on his promise.Which of the following statements is most likely TRUE?

Sentinel Safety Inc entered into a contract with Glengarry Shopping Mall to provide security.The parties' contract contained a clause that said: "Neither Sentinel nor its employees or agents shall be held liable in an amount that exceeds $10 000 for any loss or damage that may be caused in the performance of this agreement." Glengarry promised that it would not sue the named parties for more than $10 000.Elaine works as a security guard for Sentinel.As part of her job,she regularly patrols the Glengarry Shopping Mall.Which of the following statements is TRUE?

Epsilon Inc and Delta Ltd entered into an agreement.Epsilon promised to pay $10 000 to Delta in March.Delta promised to deliver a piece of machinery to Epsilon in June.Epsilon paid the money in March.It is now April.The parties do not yet have a contract because while Delta has given a promise,it has not yet performed that promise.

The traditional doctrine of estoppel,rather than promissory estoppel,requires proof

JB Inc sold a piece of equipment to SubSurf Ltd for a total price of $240 000.Under the terms of their contract,SubSurf was required to pay $10 000 on the first day of each month for 24 months.The contract also stated that if SubSurf was late on any single payment,JB was entitled to demand immediate payment of the entire outstanding amount.SubSurf made the first four payments on time.For the next six months,however,it was habitually late by at least one week.JB did not object to receiving those late payments.However,when SubSurf did not pay the eighth instalment on the first day of the next month,JB demanded immediate payment of the entire outstanding amount.Which of the following statements is TRUE?