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Question 1

What are exceptions to the mutuality rule?

Answer 1

• unilateral contract
• limited promises
• voidable promises
• conditional promises
• alternative promises
• implied promises
• requirements/output contracts

Question 2

What is an example of a limited promise?

Answer 2

A rental contract that allows for termination anytime on giving 10 days’ notice. Person must pay rent for 10 days, so this is a real promise

Question 3

When would a promise be voidable?

Answer 3

On the grounds of infancy

Question 4

If you’re 17 and buy a car, the contract is voidable because of infancy, so not enforceable against you, but how about the seller?

Answer 4

He is bound. The contract can be enforced by the minor, but not against the minor

Question 5

What is a conditional promise?

Answer 5

When promisor only has to perform if a specified condition happens

Question 6

Is a conditional promise illusory?

Answer 6

No because you have limited your future options since if condition doesn’t happen, you must perform

Question 7

What is an alternative promise?

Answer 7

Promisor can discharge his obligation by choosing between two or more alternatives

Question 8

What is an example of an alternative promise?

Answer 8

Someone promises to either paint your fence or your garage for $500

Question 9

What is the general rule about alternative promises?

Answer 9

They are only enforceable if each performance would have been consideration if it was bargained for alone

Question 10

What is the rule for alternative promises when the promisee has the right to demand one of several alternative performances?

Answer 10

There is consideration if any of the alternatives would be consideration

Question 11

If one party is allowed to supply or determine a material term, is that illusory?

Answer 11

• common law: if term is material, yes

- UCC: good faith obligation, so no

Question 12

Why are requirements/output contracts not illusory?

Answer 12

Because parties have limited their options since they must buy/sell everything to/from a person

Question 13

What is the UCC rule for requirements/output contracts?

Answer 13

Quantity tendered/demanded can’t be unreasonably disproportionate to a stated estimate or normal amount before the output/requirement

Question 14

What is the implied promise for output/requirement contracts?

Answer 14

That the company will remain in business

Question 15

If a company goes out of business during an output/requirements contract, is that a breach?

Answer 15

Only if the shutdown was motivated by unprofitability of the contract, which violates a duty to act in good faith. If it was for any other reason, it is not a breach

Question 16

If a legal duty existed before a new promise, is that consideration?

Answer 16

No

Question 17

What are two different types of pre-existing legal duties that don’t constitute consideration?

Answer 17

• public duties

- contractual duties

Question 18

How is a public duty not consideration for a new promise?

Answer 18

If an official promises to perform an act that is already within the scope of his duties, that is not consideration

Question 19

If a police officer takes $50 to watch a store, is that enforceable?

Answer 19

No, the act was within the scope of his official duties

Question 20

If a cop is on vacation and agrees to watch the lobby for two hours a day, is that enforceable?

Answer 20

Yes, because it is not within the scope of his official duties

Question 21

If a witness makes an agreement with the police to tell the truth on the stand, is that enforceable?

Answer 21

No, because every citizen has a duty to do that, so there is no consideration

Question 22

Is a threat to break a contract considered duress?

Answer 22

No, unless it leaves the person with no reasonable alternative

Question 23

If you enter a contract under economic duress, is it enforceable?

Answer 23

No, assent induced by improper threat that leaves a promisee no reasonable alternative is not enforceable

Question 24

If a builder contracts to put an addition on a house for $10,000, then later says he will only do it for $12,000, and there are others that would do it for less, but the person agrees and pays, is that duress?

Answer 24

No, because there are others that would do it instead

Question 25

If after performance has started, a builder walks off the job unless you give him more money, and delay will mean major losses, is that duress?

Answer 25

Yes

Question 26

If you owe money to a creditor and he agrees to accept less in full satisfaction of the debt, is the payment of the lesser amount considered consideration?

Answer 26

Not usually

Question 27

What are some exceptions to the pre-existing duty rule?

Answer 27

• different performance
• honest dispute
• unliquidated obligations

Question 28

If the debtor does something different than what he originally agreed to do, does the pre-existing duty rule apply?

Answer 28

No

Question 29

If there is an honest dispute about whether someone owes an obligation, is payment of a lesser amount consideration to discharge it in full?

Answer 29

Yes

Question 30

What are unliquidated obligations?

Answer 30

When the amount is uncertain

Question 31

If an obligation is unliquidated, and a debtor pays less than he owes, is that consideration?

Answer 31

Yes