Deck 3: Enforeciability: Consideration, Promissory Estopple, Formalities

Question 1

The presence of consideration makes a promise fully enforceable irrespective of whether the promisee has relied upon it and whether it would be inequitable to go back on it.

Answer 1

True

Question 2

What is the relevance of the Court of Appeal's decision in Williams v. Roffey Bros (1991) for the doctrine of consideration?

A) It established that consideration is not necessary for contract modifications.
B) It established that consideration is not necessary where the parties have laid down their agreement in writing.
C) It established that consideration can consist not only of legal benefit or detriment, but also of 'practical benefit'.
D) It established that promissory estoppel can be used to enforce contract modifications.

Answer 2

C

Question 3

What is the significance of the Court of Appeal's judgment in MWB Business Exchange Centres Ltd v Rock Advertising (2016) in relation to 'practical benefit' as consideration for contract modifications?

A) 'Practical benefit' can apply in cases where there is a promise to accept less for the same as well as to promises to pay more for the same.
B) 'Practical benefit' can only apply to promises to pay more for the same and not promises to accept less for the same.
C) There will be 'practical benefit' in all cases where the parties agree to a contract modification.

Answer 3

A

Question 4

Yazoo Construction Co Ltd agrees with Zelda Holdings on 1 January to build an office block, completion due by 31 December. On 1 June, Yazoo contracts with subcontractor Xerxes Co Ltd to provide for the electrical network within the building for £1.5 million, completion due by 30 November. By 1 October, it becomes clear to Xerxes that it cannot complete the work on time. Xerxes estimates that it could never have completed the work within five months for the stipulated price, and that it should have either contracted for completion within eight months for the agreed price or should have raised its asking price by £250,000. Wendell, the owner of Yazoo Construction, agrees to pay Xerxes an additional £250,000 out of his own funds on the condition that the work is completed no later than 30 November. Xerxes completes the job on time. Is the promise to pay an additional £250,000 enforceable?

A) Yes, it is supported by consideration.
B) No, Xerxes has merely promised to do what it was already obliged to do under the original contract.
C) Yes, Wendell will be estopped from going back on his promise.
D) No, promissory estoppel cannot create a new cause of action.

Question 5

Fred owes Amy £100 but has failed to pay it for months. One day, Amy sees Fred at the bank. Fred is withdrawing £90. Amy reminds him of the debt. Fred agrees to pay Amy £90 if she stops whining about the remaining £10. Which of the following statements is TRUE?

A) This agreement lacks consideration and is unenforceable since Amy is agreeing to accept less for the same. Amy can claim the remaining £10.
B) This agreement may be supported by consideration since Amy may have a practical benefit in accepting £90 instead of £100, in which case she would be unable to go back on her promise and claim the remaining £10.

Question 6

Which of the following agreements is supported by consideration?

A) Peter owes William £9,000. Peter cannot pay off the debt and his father, Chester, offers William £5,000 in full and final settlement.
B) Steven has hired the son of his principal investor, Mark, to sit on the board of his company. Mark frequently goes out drinking or gambling and is lazy at work. To ensure that he makes a good impression on a business trip to Asia, Steven promises to pay Mark an additional £1000 if he promises to behave himself.
C) Hannah is planning to go to the seaside this weekend. She tries to convince Robert to come along, but he is pessimistic about the weather. Hannah promises to buy Robert dinner if it rains this weekend.
D) None of the options given is correct.

Question 7

Which of the following agreements is not supported by consideration?

A) Alan owes Ben £80,000. Alan cannot pay the amount and Ben agrees to discharge the debt if Alan gives him his guitar signed by John Lennon worth about £50,000.
B) David is tending his garden when he realizes that Roger's hedges bordering his lawn are uneven. He decides to even them out. Roger is so delighted when he returns home that he promises to paint David's shed when he paints his own fence.
C) Tom discovers that a wall in his apartment is rotting away and will have to be replaced. He believes the source of the leak comes from Suzanne's bathroom. Tom presents Suzanne with a bill for £550 and threatens her with a lawsuit if she does not pay. After Suzanne has paid, she is contacted by the City Council and told that the leak is coming from Dan's apartment.
D) All of the options given are correct.

Question 8

Which of the following agreements is supported by consideration?

A) Alice owns a sandwich shop and offers customers a loyalty card where a stamp is placed each time they buy a sandwich. Once a customer has purchased 10 sandwiches and has 10 stamps on his card, he receives a sandwich for free. Rob has ten stamps on his card and gets a free cheese sandwich.
B) Rick works as a street cleaner in Nottingham. Every Monday, he sweeps in Lucy's neighbourhood. On New Year's Day, the streets are littered with firecrackers and beer cans. When Rick arrives the following Monday, Lucy offers him £20 to clean the pavement in front of her house.
C) A wall in Tom's apartment is rotting away and will have to be replaced. Tom knows the source of the leak is coming from Dan's apartment, but knows that Dan will not pay unless he takes him to court. Instead, he tells Suzanne, who is easily intimidated, that the leak is coming from her apartment and threatens to sue her unless she pays £550.
D) None of the options given is correct.

Question 9

Which of the following agreements is not supported by consideration?

A) Barney's wife, Tina, tells him that she wants a divorce. In order to prevent her from winning a substantial award in the separation, he agrees with Fred, his business partner, to sell his part of the business to him for £1.
B) Betty contracts with Albert to dig a swimming pool in her back yard for £12,000. After Albert has only excavated two feet, he discovers the ground is solid granite and the whole project will cost four times as much as planned. Albert proposes using the excavated site to build a fishpond for £2,000, which Betty agrees to.
C) Jane is selling her car. Howard offers to pay £3,000 in cash to Jane and to make payment within a week, which Jane agrees to. However, Howard then receives an unexpected bill for roof repairs and so cannot afford to pay for the car immediately. He offers to pay £2,000 'take it or leave it', with payment by instalments over 3 months. Jane accepts.
And says that he will only be able to pay in 2 months
D) All of the above.

Question 10

Consider the following two statements:
I)An unfair bargain which is obscenely advantageous for one party and completely disastrous for the other is not supported by consideration and thus unenforceable.
II)No type of estoppel can ever create a new cause of action; it can only act 'as a shield, not as a sword'.
Which of these statements is true?

A) Both I and II
B) Only I
C) Only II
D) Neither

Question 11

Allcast Co agrees to lease shop premises from Brickcourt Properties for two years. Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 requires such contracts to be made in writing and signed by both parties. Allcast agrees with Brickcourt that they will sign the formal contract before the weekend, whereupon Brickcourt contracts with a subcontractor to begin fixing up the premises by next week. Before the weekend, Allcast has found a more suitable property and informs Brickcourt that they will no longer sign the lease. Can Brickcourt prevent Allcast from escaping the agreement?

A) No, the agreement is not supported by consideration.
B) Yes, the lease agreement is supported by consideration and thus there is no need to comply with formalities.
C) Yes, although the parties have not complied with the necessary formalities, Allcast is estopped from resiling on its promise.
D) No, the agreement is supported by consideration, but, since the parties have not complied with the necessary formalities, the contract is void

Question 12

Margaret is planning to open a pet shop and has agreed to lease commercial premises on the High Street from Paddington Properties for five years. According to section 52(1) of the Law of Property Act 1925, a lease for more than three years must be made by deed. Paddington Properties assures Margaret that the deed will be drawn up by the end of the month, once their legal advisor has returned from vacation. In the meantime, Paddington Properties allow Margaret access to the premises in order to commence renovation works to the shop. Two months later, Margaret has invested over £10,000 in renovations to the premises, but Paddington Properties has still not drawn up the deed. Instead, they were in constant negotiations with another interested lessee who has now offered them a higher price for the premises. Paddington inform Margaret that she must vacate the premises by the end of the month. Can Margaret prevent her eviction?

A) Yes, the agreement is supported by consideration and thus enforceable.
B) No, the agreement is not supported by consideration and the formality requirements have not been fulfilled.
C) No, the formality requirements were never fulfilled and estoppel cannot be used to create a new cause of action.
D) Yes, Paddington is estopped from enforcing their right to evict Margaret.

Question 13

German Shipping has chartered a ship to Tanzanian Freighters for five years. In the second year of the contract, a severe crash in the charter price makes it more profitable for Tanzanian Freighters to breach the contract and find another charterer. To ensure the preservation of the contract, German Shipping agrees to reduce the charter price by £8,000 per month. By the end of the fifth year, the market still has not fully recovered to per crash levels. This only happens a full year later. Can German Shipping claim the difference in arrears, or is the renegotiation made in the second year enforceable?

A) GS cannot claim the difference in arrears; it is estopped from going back on its promise.
B) GS can claim the difference in arrears; promissory estoppel can only suspend rights, not extinguish them.
C) GS can claim the difference in arrears; promissory estoppel cannot create a new cause of action.

Question 14

In which of the following cases is B not estopped from going back on the promise?

A) Alan is sent a bank statement by British Bank informing him that his yearly interest plus loyalty bonus amounts to £2,500 this year. This is higher than usual and Alan calls the bank to make sure it has not made a mistake. British Bank replies 'We don't make mistakes' and Alan decides to use the money for a trip to Majorca. Two months later, British Bank calls Alan to inform him that it had in fact made a mistake.
B) At the beginning of her lease, Alice asks her landlord Ben to clarify the provision that all repairs to the apartment will be divided equally. Alice inquires whether the outside of the building falls within that provision and the parties decide that it does not. After substantial renovation to the façade of the building, Alice is presented with a bill and a copy of the lease.
C) Amy owes Bayside Motors £2,000 for a car she purchased there several months ago. Rather than repossessing the car, Bayside offers Amy an additional two months to pay off the debt. Two days later, Bayside sees that Amy has put the car up for sale.

Question 15

In which of the following scenarios is B estopped from going back on his promise?
I)Amy has recently lost her job. She owes Beverly £500 for last month's rent and is afraid she won't be able to pay £500 this month. Beverly agrees to accept £400 for both months, but expects to receive the normal amount once Amy is working again. A month later, Amy has a new job and is earning twice as much as before. Beverly asks for the outstanding £1000 for the previous two months.
II)Ben contracts with Ahmed to paint his house for £500. By the time Ahmed has done half the job, he realizes he's already exceeded his costs. Ben agrees to pay Ahmed an additional £350 to finish the job and Ahmed promptly does so.

A) I and II
B) Only I
C) Only II
D) Neither I nor II

Question 16

What is the impact of the decision in MWB Business Exchange Centres Ltd v Rock Advertising (2016) on the doctrine of promissory estoppel?

A) It reinstated the traditional understanding of the requirements of reliance and inequitability by holding that an agreement to accept part-payment of a debt, without more, would not make it inequitable for the promisor to resile from his promise.
B) It was held that promissory estoppel could create a new cause of action.
C) It held that no estoppel arises in cases where a statement is made 'without prejudice'.
D) All of the above.

Question 17

Where a contract is for the sale of an interest in land, you need either consideration or formalities to make the contract enforceable.