ANSWER KEY
Chapter 9 Consideration and Cyber–Payments
Opening Case Questions
1. Consideration is the mutual promise to exchange benefits and sacrifices among the parties to a
contract. If an agreement has no consideration, it is not a binding contract. Consideration consists of a
mutual exchange of gains and losses between contracting parties. In the exchange, a gain by the offeree
2. Yes. There is bargained-for-exchange in the deals between Lightbody and Rust. An agreement
involves a bargained-for exchange when (1) a promise is made in exchange for another promise, (2) a
promise is made in exchange for an act, or (3) a promise is made for forbearance of an act. When
Lightbody agreed to alter his method of payment, he did something that he did not have to do. He had,
therefore, suffered a detriment sufficient to provide consideration. He was putting his payment at risk,
3. The fact that no one knew the exact monetary value of the consideration is of no concern to the
4. An accord and satisfaction is a new agreement resulting from a bona fide dispute between the
5. For accord and satisfaction to operate properly certain elements are necessary. First, there must be
a genuine dispute as to the amount due under the original agreement. Second, one of the parties, usually
A QUESTION OF ETHICS
Special Directions to the Instructor: It is very challenging for an instructor to predict with confidence
the wide variety of answers that students will provide for the ethical question asked in the Question of
Questions for Review and Discussion
1. The promise to exchange things of value is called consideration. It is the thing of value promised
to the other party in exchange for something else of value promised by that other party. It is this
2. A legal detriment can be any of the following: (1) doing something (or promising to do
something) that one has a legal right not to do; (2) giving up something (or promising to give up
3. Consideration has three characteristics: (1) The agreement must involve a bargained-for
4. A court may refuse to enforce a contract or any clause of that contract if it considers the contract
6. There are three ways that the courts can seek to uphold charitable pledges. The first way involves
actual consideration. This occurs when charitable contributions are made on the condition that the
promisor be remembered for the gift by having his or her name inscribed in some way on a memorial
associated with the project. Some courts see this promise to install a memorial to the pledgor as
consideration. A more contemporary approach is to use either promissory estoppel or public policy to
support the claim. Promissory estoppel involves the detrimental reliance on a promise made by another
party. If in reliance on a pledge or a series of pledges, a charity goes forward with a project, the courts
7. A disputed amount is one on which the parties never reached mutual agreement. If a creditor
accepts as full payment an amount that is less than the amount due, then the dispute has been settled by
accord and satisfaction. Accord is the implied or expressed acceptance of less than what has been billed
the debtor. Satisfaction is the agreed-to settlement as contained in the accord. Only if the dispute is
8. The most common agreements that are enforceable without proof of consideration are promises
9. Promissory estoppel is the legal doctrine that restricts an offeror from revoking an offer, under
certain conditions, even though consideration has not been promised to bind an agreement. To be
effective, promissory estoppel requires that the offeror know, or be presumed to know, that the offeree
10. Measuring consideration is often an issue when people buy and sell on-line. It is now possible to
comparison shop online using search engines, buying from user-friendly industries, and focusing on
sellers that use price comparison programs. Cyber-shopping does involve hidden costs including
Internet access fees and shipping and handling costs. Some sellers also engage in illegal practices such
Cases for Analysis
1. The shareholder approval bill, if enacted into law, would not conflict with established contract
law principles just as long as the vote was not binding. On the other hand, if the bill made the
shareholder vote binding, it would clearly violate contract law. Specifically, the binding nature of the
2. The incentive plan discussed in this case provides additional consideration to the CEO for doing
3. This is a tricky case. It is so tricky, in fact, that the trial court and the appeals court had two
diametrically opposed answers. The trial court believed that GM’s decision to move the plant was
4. Aviation has not transferred anything to the Institute that it did not already owe the Institute under
5. The small claims referee will rule in favor of Wilma. Even though there are probably some health
6. Evans left her job to take the job offered to her by Davidson. Davidson knew that Evans was
going to change her position in reliance on the promises that he made to her. Consequently, the doctrine
7 No. This is an illusory promise that does not obligate Kennelsworth in any way. An illusory
promise is one that does not obligate the promissor to anything. A party who makes an illusory promise
is the only one with any right to determine whether the other party will be benefited in any way.
7. No. Tippon’s promise to O’Hanlon is not enforceable. A promise to give another
something of value in return for goods or services rendered and delivered in the past, without
8. No. Vanoni cannot make the delivery of the remaining 12,000 specimens
consideration in a new agreement with the Institute. A promise to do something that one is
9. No. As a general rule, courts do not try to determine the value of consideration.
END CHAPTER NINE