Exam 8: Consideration and Privity

Lewis is a wealthy entertainer.While watching a telethon that was aimed at raising money for medical research,he was overwhelmed by a sense of grief and sorrow.He consequently picked up the telephone,dialed the number on the screen,and promised to donate $5 million within one month.The volunteer on the other end of the line thanked Lewis and assured him that "the money will be put to good use." Two days later,before Lewis had sent in a cheque,the telethon organizers announced that,because of the public's overwhelmingly positive response,and in particular because of Lewis's generous promise,their organization would be able to build a research facility that they previously believed was beyond their budget.They also announced that they would name the facility the Jerry Medical Research Park,after Thomas Jerry,a local surgeon who recently had died.Lewis became very angry.He had long hated Jerry and he was horrified at the thought of paying for a building named in his enemy's honour.He therefore informed the telethon organizers that he had changed his mind and that he would not be sending any money.The telethon organizers have now sued for breach of contract.Which of the following statements is TRUE?

In exchange for Miles's promise to pay $10 000 to the Society for Prevention of Cruelty to Animals,Fran promised to give up eating meat for one year.Which of the following statements is TRUE?

Which of the following rules applies to an equitable assignment?

Which of the following statements is TRUE?

Explain the relationship between offer and acceptance on the one hand and consideration on the other.Your answer should focus on the concepts of cross offers and mutuality of consideration.

Mohana promised Ian that she would pay $10 000 to him on his birthday.Ian gave nothing in exchange for that promise and neither party placed their seal on the document containing Mohana's promise.Ian demanded payment on his birthday.Mohana refused,primarily on the basis that she had recently become quite annoyed with him.Ian then threatened to start a lawsuit.However,he also offered to settle that lawsuit in exchange for payment of $7500.Mohana accepted that offer in an attempt to avoid paying the full $10 000.Several weeks after paying $7500,however,she learned that her initial promise was not actually legally enforceable.She also learned that Ian,who was a lawyer,was aware of that fact all along and made the threat knowing that there was no meritorious lawsuit which he could bring against Mohana.Which of the following statements is the most accurate?

The employment exception to the privity doctrine

Betta Corp,a manufacturer,sold widgets to Splendens Inc,a wholesaler.Under the terms of that agreement,Splendens was entitled to resell the widgets to a retailer,but only if its contract with the retailer (i)required the retailer to sell the widgets to its own customers at a list price established by Betta,and (ii)required the retailer to pay $500 to Betta for every widget that it sold to a customer at a price that was below the list price established by Betta.Splendens in fact sold the widgets to Siamese Fish Ltd,a retailer.Siamese then sold ten of the widgets to its own customers for less than Betta's list price.Is Siamese required to pay $5000 to either Betta or Splendens? Explain your answer.

Alpha Corp entered into an agreement with Beta Inc.Alpha promised to transfer certain equipment to Beta and Beta promised to pay $50 000 to Gamma Ltd.Alpha has provided sufficient consideration but Beta has not.

An assignment can only be created by an intentional act of the assignor.

Bentley Inc operates a sporting goods store.In January,it purchased a shipment of baseball bats from Tadpole Manufacturing Ltd for $20 000.In February,Tadpole orally assigned its rights under that contract to J&H Collections.In May,Bentley purchased a shipment of footballs from Tadpole for $15 000 under a separate contract.Immediately after delivery,Bentley discovered that the footballs were defective.They had been improperly treated with a chemical that completely destroyed their leather exterior.The footballs consequently are completely worthless.Both contracts between Bentley and Tadpole required payment to be made by the end of June.Which of the following statements is TRUE?

A promise to perform a pre-existing contractual obligation cannot provide consideration under a new contract with the same party.That rule always reflects commercial reality.

Herman is owed money from Victoria and owes money to Lyndon.In order to satisfy his contractual debt to Lyndon,he assigns the debt from Victoria to Lyndon.Lyndon accepts,but does not tell Victoria,assuming Herman will.Which of the following is true?

Deecey renovated Reece's shop in exchange for the promise of $75 000.Reece had enough money to pay the entire bill,but simply did not want to do so and Reece wanted to cheat Deecey out of the contract price it had agreed to pay.Reece also knew that Deecey's financial situation was very weak and that it might be forced into bankruptcy if it did not receive at least $25 000 for its work.Reece therefore offered to pay $25 000 in full satisfaction of the outstanding debt.Because of the circumstances,Deecey accepted that offer and promised that it would not demand payment of the additional $50 000.Reece paid $25 000 to Deecey.However,Deecey now claims that it is entitled to the additional $50 000.Which of the following statements is TRUE?

Laetitia agreed to provide certain services to Hans in exchange for a payment of $10 000.Although Laetitia fully performed her side of the agreement,Hans refuses to pay anything.He insists that Laetitia does not have a right to sue for breach of contract because,in performing the services,she was merely doing something that she had become obliged to do even before she entered into her agreement with Hans.Hans's position is correct if Laetitia's pre-existing obligation was

Which of the following situations illustrates a contractually enforceable promise?

Which of the following explains why the courts will not enforce an agreement that was created on the basis of a pre-existing public duty?

Dina threatened to sue Chris for $25 000 unless he immediately paid her $10 000.Chris paid $10 000.He will be entitled to recover that money as long as he later proves that Dina honestly and mistakenly thought she had the right to sue Chris for $25 000.

Khalid owes Jill $60 000 and he has to repay it by June 30.On May 10,he learns that Jill is desperate for money.Khalid only has $30 000,but offers to pay that amount to her the next day,May 11,in exchange for forgiveness of the debt.Which of the following is true?

Carlos entered into a contract with Keisha.He promised to design a computer system for her business and she promised to pay $50 000 to his brother,Mikey.When that contract was created,Keisha agreed that Carlos would receive her promise on trust for Mikey.Which of the following statements is TRUE?