Exam 12: Consideration

An illusory promise is a promise that is enforceable without consideration.

Coverage, Inc. (CI), coordinates an insurance network that includes 1 million potential patients. By contracting with CI, a medical provider gains access to the network in exchange for accepting pay?ments at lower than market rates. Doctors, Inc., contracts with CI but, when few patients are forthcoming, files a suit to recover the differ?ence between the contract and market rates. The court will most likely rule that the contract is

Fact Pattern 12-A1 Dave's Hobby Town and Eva's Yarn Shoppe are adjacent stores with adjoining parking lots. Dave offers Eva a discount on purchases from Dave's store if Eva will not tow the cars of Dave's customers who park in Eva's lot. -Refer to Fact Pattern 12-A1. Dave's discount is legally sufficient consid?eration

In May, Rolf agrees to work for Soda Sales Company at $800 per week for a year beginning June 1. The following January, Tropical Beverages, Inc., offers Rolf the same work at $900 per week. Rolf tells Soda about the offer. Soda offers to enter into a new contract with Rolf at $875 per week. If Rolf agrees, is the new Soda contract enforce?able? Why or why not?

A later promise to do what one already has a legal duty to do is legally suf?ficient consideration.

A release does not require consideration to be legally binding.

A businessperson who sells a business in reliance on promises by an?other is not entitled to damages under the doctrine of promissory estoppel.

In most states, a release requires a signed writing.

Fact Pattern 12-B2 Dag and Enita are in an auto accident. Dag offers B $2,000 if Enita promises not to pursue her potential legal claim against Dag. Enita agrees. Later, Enita discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injury. -Refer to Fact Pattern 12-B2. The agreement between Dag and Enita is

Fact Pattern 12-A3 Cut-Rate Construction Company begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay. -Refer to Fact Pattern 12-A3. If CCC offers, as a reason for the extra $100,000, that extraordinary unforeseen difficulties will add consid?erable cost to the project, the agreement is

National Business Company and One-State Sales, Inc., agree to si?multa?neously rescind their contract and enter into a new agreement under which their duties are the same. National later sues One-State to enforce the new agreement. The court

Fact Pattern 12-B1 Sal contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract. -Refer to Fact Pattern 12-B1. Sal and Tasty

Jill promises to pay Kyle $500 because "he does not have as much money as other people." Jill's promise is

Use of the word consideration in an agreement means that consideration has been given.

XL Retail Sales, Inc., promises its salaried employees a bonus at the end of the year if management thinks it is warranted. This promise is

If a promise is made, it will be enforced.

Failing to use the word consideration in an agreement means that no consideration has been given.

Ann is injured in an accident caused by Bob. Bob agrees to pay Ann $2,500 if she agrees to release Bob from further liability. Ann agrees. If Ann's damages ultimately exceed $2,500, Ann can

A promise to do something that one has a prior legal duty to do is not consideration.

A promise by one party to pay another for refraining from an act is enforceable.