CHAPTER 12
CONSIDERATION
ANSWERS TO QUESTIONS
AT THE ENDS OF THE CASES
CASE 12.1—QUESTION (PAGE 244)
WHAT IF THE FACTS WERE DIFFERENT?
If the nephew had not had a legal right to engage in the behavior in which he agreed not to indulge,
would the result in this case have been different? Most likely, yes, because if Story had not had a legal
CASE 12.2—QUESTIONS (PAGE 247)
THE LEGAL ENVIRONMENT DIMENSION
How could Access Organics have obtained a non-compete agreement from Hernandez that would have
been enforced? Some employers use such forms all the time, even when there is no purpose in so doing
because some employees pose no competitive threat. The non-compete clause can, however, serve as a
barrier to other employers who are afraid of hiring a person and then possibly facing litigation. Even if
the suit by the former employer is not successful, other employers may not want to risk such expense so
they simply do not hire such persons. Thus widespread usage not related to trade secrets, customer
lists, or other valuable information that deserves protection, is a business tactic hard to justify, but used
frequently nonetheless.
THE ETHICAL DIMENSION
Would an economic recession and global financial crisis excuse a former employee from having to
comply with a noncompete clause that he or she had signed? Why or why not? Yes, because any
104 UNIT THREE: CONTRACTS AND E-CONTRACTS
CASE 12.3—QUESTIONS (PAGE 252)
1A. The defendant argued that the promise to renew the lease was not sufficiently definite to
support a claim for promissory estoppel. How did the court respond to this argument? The court stated
in its opinion that the defendant’s promise that it would enter into a new lease if the plaintiff made the
new space available obligated the defendant to make a good faith effort to reach an agreement on the
terms of the lease. The court found that, in these circumstances, the promise was sufficiently definite to
support a claim for promissory estoppel.
ANSWERS TO QUESTIONS IN THE REVIEWING FEATURE
AT THE END OF THE CHAPTER
1A. Elements
Yes, there was an offer that was accepted with consideration. The parties agreed to the terms of the
deal, which included cash for the building and the labor to take the building down and put it back
together.
2A. Principle
Under the rule of unforeseen difficulties, a change in the terms may be allowed because of unforeseen
difficulties, although that rule is not easy to have applied.
3A. Promise
106 UNIT THREE: CONTRACTS AND E-CONTRACTS
ANSWER TO DEBATE THIS QUESTION IN THE REVIEWING FEATURE AT THE END OF THE
CHAPTER
Courts should not be able to decide on the adequacy of consideration. A deal is a deal. Courts
should not accept to rule on the adequacy of consideration because in so doing, they create a moral
hazard situation for anyone who, after the fact, doesn’t think she or he “got a good deal.” In other
words, if those who enter into agreements know that they can later avoid their contractual obligations
by claiming that the consideration was inadequate, they will take less time and resources to determine if
the agreement is correct, appropriate, and fair.
ANSWERS TO QUESTIONS AND CASE PROBLEMS
AT THE END OF THE CHAPTER
12-1A. Preexisting duty
(Chapter 12—Page 245)
The general rule is that a promise to do what one already has a legal or contractual duty to do is not
12-2A. QUESTION WITH SAMPLE ANSWER: Preexisting duty
The legal issue deals with the preexisting duty rule, which basically states that a promise to do what one
already has a legal or contractual duty to do does not constitute consideration, and thus the return
promise is unenforceable. In this case, Shade was required contractually to build a house according to a
specific set of plans for $53,000, and Bernstein’s later agreement to pay an additional $3,000 for exactly
12-3A. Consideration
(Chapter 12—Pages 246–247)
Past consideration is no consideration; therefore, a promise to pay for an event that has already taken
place is not enforceable. There is nothing to bargain for. Also, there is no consideration if the promise is
12-4A. Illusory promises
(Chapter 12—Page 248)
12-5A. Accord and satisfaction
(Chapter 12—Page 249)
12-6A. Consideration
(Chapter 12—Pages 243–244)
The court issued a summary judgment in Helikon’s favor, and Gaede appealed to a state intermediate
12-7A. Settlement of claims
(Chapter 12—Page 249)
Zurich filed a motion for summary judgment, which the court granted. The court explained that “[i]n the
absence of fraud, a release supported by a valuable consideration, unambiguous in meaning, will be
12-8A. CASE PROBLEM WITH SAMPLE ANSWER: Adequacy of consideration
Adequacy of consideration relates to the fairness of a bargain—“how much” consideration is given.
Generally, a court will not question the adequacy of consideration if it is legally sufficient—something of
legal value, regardless of “how much” it is. A court may review adequacy, however, if the amount or
12–9A. Rescission
(Chapter 12—Page 246
The reviewing court concluded that “Rescission is intended to restore the parties as nearly as possible to
12-10A. A QUESTION OF ETHICS: Promissory estoppel
(a) The court issued a summary judgment against Emily’s claim, noting that in cases in which
promises of support had been enforced the parties had lived together “functioning as a family unit for a
considerably longer period of time and . . . the claimant[s] suffered harm because of reliance on . . .
broken or unfulfilled promise[s].” On appeal, a state intermediate appellate court affirmed the judgment
five years and a case in which enforcement had been denied when the parties had lived together only
eleven months. “Here Emily and John lived together for only two and one-half years. Their relationship
ended not because of a broken promise but by John’s sudden and unanticipated death. Emily argues
that the relatively short length of their cohabitation should not be a determinative factor when it was
clearly demonstrated they intended to share their lives together including marriage. But life is composed
CHAPTER 12: CONSIDERATION 111
The court noted that Emily had John’s $150,000 IRA and that she still owned her home in
Monmouth Beach. She was also “a practicing lawyer, which enables her to support herself. . . . There
was no significant detrimental reliance by Emily on John’s promise of lifelong support. Although she
suffered a severe loss when John died, that loss cannot be remedied by an award” of a portion of his