Deck 8: The Requirement of Consideration

Question 1

A and B are neighbours. Before A left on a holiday, he asked B to "keep an eye on his house." While A was on holidays, B noticed that A's lawn was in need of cutting and proceeded to cut the lawn. On A's return from his holiday, B demanded $10 for cutting the lawn. B would not be entitled to claim anything for his service because his act was gratuitous.

Answer 1

True

Question 2

A and B are neighbours. Before A left on a holiday, he asked B to "keep an eye on his house." While A was on holidays, B noticed that A's lawn was in need of cutting and proceeded to cut the lawn. On A's return from his holiday, B demanded $10 for cutting the lawn. A's statement was a request for service, and hence B may claim for his service of cutting of the lawn on the basis of quantum meruit.

Answer 2

False

Question 3

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?

A) The bicycle repairman made a promise intending it to affect their relationship with Zoe.
B) The bicycle repairman intended that the promise should be acted upon by Zoe.
C) Zoe relied upon the promise made by the repairman.
D) Zoe acted or changed her position because of the promise that was made by the repairman.
E) All of the responses are correct.

Answer 3

E

Question 4

Cyril owed Robert $12,000 but since he had lost his job, he could only pay $7,000. Reluctantly, Robert agreed, since they were old friends, to accept the lesser amount as full payment of the debt, and Cyril gave him the money. Now Robert has heard that Cyril has just won a huge amount in a lottery, but Cyril will not pay him the rest of the debt. "A deal's a deal," he says.

A) Since Cyril gave no consideration for Robert's promise to forgive the rest of the debt, Robert can successfully sue him for the balance.
B) While Robert would have been able to sue Cyril under Common Law, statute law says that, having accepted part of the debt as payment for the full amount, Robert cannot now demand the balance.
C) Whether or not Robert could successfully sue for the balance of the debt, the courts would not allow a debtor to be unjustly enriched in this way and would order Cyril to pay Robert the balance of the debt.
D) All of the responses are correct.
E) None of the responses are correct.

Question 5

Regarding consideration, the following questions can help determine whether there is a contract rather than a gratuitous promise: 1. Is the consideration past consideration?
2) Is the proposed consideration legal?
3) Is there consideration flowing in both directions?
4) Does it have value in each direction?
5) If not, is there an exception?

A) Numbers 1 to 5 are vital, no exceptions.
B) Numbers 1 and 2 are optional, but a failure in 3 or 4 can be saved by 5.
C) Numbers 1 to 4 are vital, 5 is optional.
D) Numbers 1 and 2 are vital, but a failure in 3 or 4 can be saved by 5.
E) Any one of numbers 1 to 5 determine there is a contract.

Question 6

A and B are neighbours. Before A left on a holiday, he asked B to "keep an eye on his house." While A was on holidays, B noticed that A's lawn was in need of cutting and proceeded to cut the lawn. On A's return from his holiday, B demanded $10 for cutting the lawn. A and B have a binding contract for the cutting of the lawn, because A's statement constituted an offer to B to cut the lawn, which B accepted.

Question 7

The Queen's Wardrobe, a dressmaking boutique, agrees to make Rhonda's wedding dress for $2,000. The dress is to be ready for her wedding on June 1^st. On May 14^th, Jane, the owner called Rhonda to tell her that the dress would not be ready on time unless Rhonda agreed to pay an extra $500 so that Jane could hire someone to help her finish the lace embroidery. Rhonda is very upset, and feeling that she has no other choice, agrees. When she picks up the dress, she tells Jane that she does not think that it is fair that she should have to pay more than they had agreed upon and refuses to do so.

A) Since Rhonda has received the benefit of Jane having paid the extra money to get the dress completed on time, she must pay the extra money.
B) By agreeing to pay and then refusing to do so, Rhonda has committed tort of deceit and a court would award Jane the $500.
C) Since Jane was obligated under the contract to make the dress for $2,000, there is no consideration for Rhonda's promise to pay more and it is therefore unenforceable.
D) Since Rhonda agreed to pay more, she has altered the terms of the contract and must therefore pay the extra $500.
E) Since the cost of hiring the extra worker to finish the embroidery was the consideration Jane gave for Rhonda for the money, she must pay it.

Question 8

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?

A) Yes, the consideration does not have to be monetary.
B) Yes, the consideration was of value.
C) Yes, Jane was entitled to reciprocal treatment under the law of equity.
D) Yes, the intention was that the services would be reciprocated.
E) No, past consideration is not valid.

Question 9

Chris offered to take Kelly to the movie. Kelly went to the movie theatre but Chris did not arrive. Can Chris sue Kelly for breach of contract?

A) Yes, there was an offer and an acceptance.
B) Yes, there was mutual intent.
C) No, the offer was an invitation to treat.
D) No, the offer was a gratuitous promise.
E) All of the answers are correct.

Question 10

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."

A) Since Software Design gave no consideration for Angela's classmate's promise to forgive the rest of the debt, Angela's classmate can successfully sue the company for the balance.
B) While Angela's classmate would have been able to sue the firm under common law, statute law says that, having accepted part of the debt as payment for the full amount, she cannot now demand the balance.
C) Whether or not Angela's classmate could successfully sue for the balance of the debt, the courts would not allow a debtor to be unjustly enriched in this way and would order Software Design to repay the balance of the debt.
D) None of the responses are correct.
E) All of the responses are correct.

Question 11

Mr. Megabucks promises the Turtle Preservation Society of Victoria that he will give it $500,000, provided it names the new headquarters building it wants to erect after him. The President of the Society tells him that his generous donation will allow them to carry on their turtle preservation work while getting decent working conditions for their staff and, at a ground-breaking ceremony soon after, the announcement is made that the building will be named after Mr. Megabucks. Four months later, Mr. Megabucks suffers severe business reversals and decides to withdraw his promise.

A) Since there was no consideration for his promise, Mr. Megabucks may revoke it at any time without being sued.
B) Mr. Megabucks is morally obligated to give the money to the Society, so the courts would enforce the promise.
C) The Society can enforce Mr. Megabucks' promise because it would not have begun to build the new headquarters if he had not made it but would have spent it on turtle preservation.
D) The Society can argue successfully that it gave consideration for his promise by naming the building after him as he requested, and Mr. Megabucks' argument that that was not adequate consideration for a promise to pay $500,000 will not succeed.
E) The Society can enforce Mr. Megabucks' promise because it would not have begun to build the new headquarters if he had not made it, but would have spent it on turtle preservation and the Society can argue successfully that it gave consideration for his promise by naming the building after him as he requested. Mr. Megabucks' argument that that was not adequate consideration for a promise to pay $500,000 will not succeed.

Question 12

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) Yes, the consideration does not have to be monetary.
B) Yes, Jane was entitled to reciprocal treatment under the law of equity.
C) Yes, promissory estoppel requires Colin complete the contract.
D) No, past consideration is not valid.
E) No, quantum meruit would apply.

Question 13

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

A) requires
B) suggests
C) obligates
D) expresses
E) does not require

Question 14

Dimitri wrote to Pat offering to sell his neo-expressionist painting, "Red Sails in the Sunset," for $25,000. Pat replied that, since it would require that he redecorate, he could not really pay more than $18,000 for the painting. Dimitri replied that he was greatly hurt and deeply insulted by such an offer, especially from someone who was supposed to be a connoisseur of fine art, but that, since he was a little tight for cash, he would be willing to let it go to Pat for $13,000 for old times' sake. Pat immediately replied, saying that he accepted the painting at $13,000 and enquiring whether Dimitri wanted it in cash. Dimitri then realized that he had typed "$13,000" instead of "$23,000" in his second letter to Pat.

A) Since a reasonable person would have realized that Dimitri had made a mistake, given their prior correspondence, a court would not allow Pat to snap up the offer.
B) Since the courts do not consider the adequacy of consideration in determining whether or not a contract has been reached, Pat will be able to enforce the contract for $13,000.
C) Pat could not be expected to read Dimitri's mind and, since he accepted the offer in good faith, Dimitri cannot now back out of their contract.
D) It is not the function of the court to consider the motives of a party negotiating a contract in asking for what to others might seem to be inadequate consideration from the other party, so Pat will be able to enforce the contract.
E) It was up to Dimitri not to make mistakes like this and the court will not allow him to use his own carelessness to excuse him from meeting his obligations under the contract.

Question 15

Metro Auto Parts supplies many garages with auto parts. On its invoice it says that the amount is due in 30 days but will be reduced by 10% if paid within 15 days. Is Metro Auto Parts bound in contract to give its customers the discount if they pay early?

A) No, when a creditor agrees to accept a lesser sum than the full amount of the debt on the due date, there is no consideration for the creditor's promise to waive payment of the debt owed.
B) Yes, when a creditor agrees to accept a lesser sum than the full amount of the debt prior to the due date, there is consideration for the creditor's promise to waive payment of the debt owed.
C) Yes, promissory estoppel would apply.
D) Yes, promissory estoppel does not apply.
E) No, the invoice would have to be under seal.

Question 16

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

A) Guarantee
B) Tender
C) Seal
D) Estoppel
E) Consideration

Question 17

Chu, a non-swimmer, fell off a ferry boat into the lake. "Help!" he cried. "$100 to the person who saves me!" Frances, a passenger on the ferry, then jumped in and held Chu's head above water until the boat's dinghy could reach them.

A) Chu must pay Frances the reward since, by her action, she accepted his offer and gave consideration for his promise.
B) Since Frances did not accept his offer, although what she did would have been consideration if there had been a contract, the offer is revocable and he need not pay her $100.
C) If Frances had been under a legal duty to save Chu, even if there was a contract that he should pay her $100 for the rescue, Chu will not have to pay her.
D) Chu must pay Frances the reward since, by her action, she accepted his offer and gave consideration for his promise and if Frances had been under a legal duty to save Chu, even if there was a contract that he should pay her $100 for the rescue, Chu will not have to pay her.
E) All of the responses are correct.

Question 18

While Marion was on extended holiday, her property became overgrown, principally with noxious weeds. Her municipality wrote to her home address threatening a $500 fine and the attendance of a municipal crew to control the problem with a further fee of $350. Marion's neighbour, George, who was tending her mail, read the notice and telephoned her and told her he would see to the cleanup job. In time, he forgot to do so, and the municipality performed the work, leaving a bill for Marion of $850. Upon Marion's return she was enraged at George's failure, and sued him in Small Claims Court for the $850.

A) Marion's claim will fail on the basis of George's defence of lack of consideration for his promise.
B) Marion's claim based on past consideration will succeed, at least in some measure.
C) Marion's claim based on estoppel will succeed, at least in some measure.
D) Marion's claim will fail on the basis of George's defence of quantum meruit.
E) Marion's claim will fail on the basis of George's defence of quantum valebant.

Question 19

Which of the following charitable pledges will be sufficient to find consideration on the part of the recipient?

A) A $100 pledge made via telephone.
B) A $100 pledge made via a website.
C) A $500 pledge made via a mail in response card.
D) A $4,000 pledge made in a meeting with the recipient.
E) None of these amounts are sufficient.

Question 20

The Big Book Store just received a shipment of 100 copies of Contemporary Business Law: Principles and Cases at wholesale price. The store contacted the local university to see if it was interested in purchasing the book. The bookstore faxed an offer of $5,000.00 for the 100 books. Due to a poor quality fax transmission the last three zeros were not visible. Upon receiving the offer, it appeared that the 100 books were on sale for $500. The university accepted the offer, received the books and deposited $500.00 in the store's bank account. Upon receiving its bank statement, the store realized the error and decided to take action against the university. Will it succeed?

A) Yes, the inadequacy of the consideration would render the transaction unenforceable because the university could not adequately determine the store's consideration due to error.
B) No, the store has lost on the deal because offer and acceptance both took place.
C) Neither side would be held to the contract because it would be ruled invalid. It will be renegotiated and the store will pay a penalty for breach of contract.
D) No, the store cannot take action, but none of the above statements are true.
E) Yes, the store can take action, but none of the above statements are true.

Question 21

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.

Question 22

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.

Question 23

X owed Y a debt in the amount of $1,000. The debt was payable on June 1^st. If X offered the $900 on the day before the due date, and Y accepted the money as payment in full, at common law, he could not later demand the remaining $100.

Question 24

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.

Question 25

A and B are neighbours. Before A left on a holiday, he asked B to "keep an eye on his house." While A was on holidays, B noticed that A's lawn was in need of cutting and proceeded to cut the lawn. On A's return from his holiday, B demanded $10 for cutting the lawn. If B should take legal action against A to collect the $10, and the court agreed that he was entitled to recover quantum meruit, he would not necessarily be entitled to the $10, but only to a reasonable price for his services.

Question 26

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.

Question 27

A and B are neighbours. Before A left on a holiday, he asked B to "keep an eye on his house." While A was on holidays, B noticed that A's lawn was in need of cutting and proceeded to cut the lawn. On A's return from his holiday, B demanded $10 for cutting the lawn. If B was entitled to claim quantum meruit, and the regular price charged by persons who mow lawns in that area was $10, B would probably be awarded $10 by the court.

Question 28

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.

Question 29

Zena decided not to honour the pledge form she had filled out for a local charity. Since her pledge was in writing and signed by her, it is enforceable by the charity.

Question 30

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.

Question 31

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. Smyth is not legally required to pay the $10.

Question 32

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.

Question 33

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.

Question 34

X owed Y a debt in the amount of $1,000. The debt was payable on June 1^st. In Ontario, and in Western Canada under statute law, if Y accepted the lesser sum as payment in full on the due date, he would not be entitled to collect the remaining $100.

Question 35

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. Smyth is obliged to pay Anderson the $10, because he promised him the money.

Question 36

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. Smyth is not obliged to pay Anderson the $10, because his promise was gratuitous.

Question 37

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.

Question 38

June, an underworld enforcer, beats up Jason under an agreement with Monty by which she is to be paid $5,000 for her work. Although each party has given consideration, June cannot use the courts to enforce the contract if Monty will not pay her.

Question 39

Susan offered to pay $500 for a ring that Daria has agreed to sell to her. Each woman has given consideration to the other for her promise.

Question 40

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.

Question 41

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?

Question 42

Mark and his wife Jean had recently built a country home on a one-acre lot. Initially overwhelmed by the size of the lawn Mark arranged for Stanley, a neighbouring farmer, to cut their lawn with his riding mower. The first cut was difficult and time consuming as there were many tall grasses and weeds to cut through. On this occasion, Stanley charged $300. One week later, Stanley cut the lawn again and charged Mark $200. Reflecting on the substantial expense this represented, Mark thanked Stanley for his services and informed him that he planned to purchase his own lawn mower and take over the job himself. Mark also told Stanley that if he were stuck in the future, he would call Stanley to help him out. Shortly thereafter Mark and Jean took a two-week vacation and on arriving home discovered that Stanley had mowed their lawn in their absence. There was an invoice stuck to their door stating $200 for mowing services and $100 for weed spraying. When questioned about the bill Stanley explained that he understood Mark wanted him to mow the lawn if he were unable to.
What legal issues does this situation raise and what arguments would be used by the parties involved?

Question 43

Consideration is defined as something that has value in the eyes of the law, and which a promisee receives in return for a promise.

Question 44

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

Question 45

Pop Co. was a small producer and bottler of carbonated beverages and employed the services of Distribu Co. to promote and distribute its products to grocers and restaurants. The sales of Pop Co.'s products had been steadily increasing and they were gaining considerable popularity among consumers. Distribu Co. had an agreement for five years with Pop Co. under which it received a commission of 10% of gross sales revenue as remuneration for its services. As the costs of advertising and promotion increased Distribu Co. wished to renegotiate its arrangement with Pop Co., particularly since its other clients were paying between 25% and 35% for similar services. During the negotiations that ensued, Distribu Co. pointed out that it was no longer profitable to work for Pop Co. Moreover, if Pop Co. did not increase its commission to 30% of gross sales, Distribu Co. would be forced to remove its services. Pop Co. finally agreed to double the commission as it had always been very satisfied with the services provided by Distribu Co. and did not want to have to establish a relationship with a new distributor. Pop Co.'s sales showed a substantial increase over the next quarter. When Pop Co. received the first quarterly commission invoice pursuant to the new arrangement it was astounded to discover the amount represented by 30% of gross sales revenue. Pop Co.'s president immediately telephoned Distribu Co. and told its finance officer that had Pop Co. realized how much the new commission would cost in dollar terms he would never have agreed to it as it was both unfair and exorbitant. He also stated that he would pay the invoice but at the long-standing rate of 10%.
Discuss the legal issues and arguments which may be raised by the parties involved and the likely outcome if legal action should ensue.
D.L.R. (4^th) 532 although the facts have been changed considerably
This case concerns the nature of consideration and, more specifically, what constitutes mutual promises. Both parties to this agreement are experienced businesspeople with equal bargaining power. Both parties agreed to provide the other with something of value. Pop Co. agreed to increase its commission and Distribu Co. agreed not to withdraw its services. Pop Co. will contend that it received no consideration for its promise of increased commission, thus rendering the agreement void. Specifically, it will argue that Distribu Co.'s promise amounts to nothing more than past consideration and that Distribu Co., for its increased commission, has provided nothing more of value than it was previously committed to provide. Distribu Co. will counter with the argument that it, indeed, promised to provide value to the new agreement. Firstly, it agreed not to withdraw its services and secondly, it achieved increased sales as a result of more promotional activity made possible through the greater resources available from the increased commission.
Although the court will not concern itself with the adequacy of the consideration it is concerned with unconscionable transactions. In this situation, there is nothing to suggest unconscionability or unfairness. The parties negotiated on an equal footing and each received something of value. Even though am increase to 30% was a substantial increase, it was not unfair considering the promotional costs involved to Distribu Co. and it appears to fall within the customary range in this industry.
There appears to have been a mutual exchange of promises constituting valid consideration between the parties. Each has received something of value under the new agreement and it ought to be enforceable.

Question 46

Estoppel is defined as a rule whereby a person who has made a promise may later deny the promise when a person relies on the promise to their detriment.

Question 47

The court is not concerned about the adequacy of the consideration, only that the consideration is legal and present in the agreement.

Question 48

A party who endorses a bill of exchange (e.g., a cheque) to enable another to negotiate it may not be held liable on the bill, even though no consideration was given as a result of the endorsement.

Question 49

A small municipality advertised a "call for tenders" to complete road construction in several newspapers. After the tender had been closed the job was not awarded to any of the prospective bidders. The municipality, on the recommendation of a neighbouring township contacted another firm and awarded it the contract on the basis of price and reputation. After learning of this development, the companies who had bid on the advertised tender joined forces and brought a suit against the municipality. They will be successful.

Question 50

Rita and her mother visit the bank as Rita wants to borrow money for a car. Her mother will be her guarantor. The banker fills out the loan form and the guarantee form but has only one gummed seal. Considering what might be the most prudent place to put the seal, the banker affixes the seal on the guarantee to be signed by Rita's mother. One seal is enough, this was the correct choice of place to put it, and the bank is fully protected.

Question 51

Jackson Excavation Ltd. provides services to contractors by supplying heavy machinery and operators for excavation and various types of fill for building lots. Jackson managed to obtain for the first time a contract with a prominent residential builder for work on a 10-home development. The value of the work and fill was $60,000 and this was agreed upon as the contract price. After the work was completed and the invoice sent, Jackson learned that the builder had just been granted approval for a 50-home subdivision. Hoping to secure the excavation work for this project as well, Jackson immediately sent a letter to the builder stating that it would accept $50,000 as payment in full for the job just completed. He also mentioned in the letter that he hoped they would continue to do business together.
What legal problems does this situation present and how might the parties solve them?

Question 52

The Municipality of Minuscule has just hired you as its business manager and the mayor just asked you to draft a call for tenders for the construction of a new municipal recreation centre.
a. What is the legal definition of a response to a call for tenders?
b. What is the legal effect if the municipality puts out such a call?
c. What should you put into the draft of the call for tenders to try to ensure that:
i. the Municipality of Minuscule retains the greatest flexibility and range of choice in selecting the successful tender?
ii. if the successful tenderer decides not to participate, the Municipality of Minuscule will be compensated for the time and money this costs it, without the necessity of going to court?

Question 53

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.

Question 54

Jones Construction asks for bids for subcontracts on a building it is to construct. The successful bid will be an acceptance of Jones' offer.

Question 55

Your car breaks down and you are stranded on a highway. You call a tow truck which takes your car to a garage and replaces a faulty part. You do not have enough cash to pay, so you give the owner your address to send the bill for towing and repairs, and venture on your way. When the bill arrives, you find the prices are high. After consulting another garage your suspicions are confirmed. The mechanic sends you a notice threatening legal action and you decide to defend it using certain legal principles. What principles will you use for your defence, and what will be the probable outcome?

Question 56

A Canadian multinational was interested in developing a market in a third-world country, which had once been communist, and was moving to a free enterprise system. It negotiated with the government to buy and resurrect the fledging state-owned automobile industry. After presenting a contract under seal, the company got "cold feet" and decided to back out of the deal. The contract will be enforced against the company because the application of a seal together with a signature is considered to represent consideration for the contract.

Question 57

Save-A-Lot Food Stores Limited regularly purchased large quantities of raisins for its bulk food section from a Canadian food wholesaler. The purchase of raisins was carried out with a separate purchase order and invoice each time although a full, written contract had been executed between the parties governing the relationship in its entirety. One of the terms of the contract specified that for individual orders in excess of 100 kg, a quantity discount of 15% would be applied to the purchase price. Since these were very favourable terms, Save-a-Lot regularly ordered quantities ranging between 500-700 kg of raisins to adequately supply all of its stores. After it had been purchasing raisins for over a year, Save-A-Lot received a note attached to its most recent invoice informing it that the contract was in error. The wholesaler's policy was that only purchases in excess of 1000 kg were entitled to the quantity discount of 15%. The invoice showed the full amount owing for the most recent purchase of 650 kg with no discount applied and also a cumulative amount equal to the 15% discount which had been granted to Save-A-Lot on all previous orders. Save-A-Lot refused to pay the extra amount.
Discuss the arguments which may be raised by the parties and render a decision.

Question 58

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.