Bargain Promises and the Legal Duty Rule Part I Self-Quiz

 

 

 

 

 

 

 

 

 

 

Ivan is a Wall Street executive who has a suite of offices on the twentieth floor of the New York Stock Exchange building in New York City. Michael is the general supervisor for Gotham Security, Inc., the security company that guards and monitors the building. As part of Michael’s job as supervisor, he makes rounds throughout the building each night at midnight, 2:00 A.M., 4:00 A.M., and 6:00 A.M. Although the rounds are thorough, Michael is not required to actually check each office in the building. Ivan does not like the fact that his suite of offices is not looked in on every night and he promises Michael that if Michael looks in on his offices every time he makes rounds, Ivan will give Michael free investment advice. For the next several weeks, Michael looks in on Ivan’s offices during each of his rounds. However, when Michael asks Ivan for investment advice, Ivan refuses to give it to him. If Michael sues Ivan for breach of contract, he will probably:
Choice 1 Win, because Michael does not have to go to Ivan’s office every time he makes his rounds
Choice 2 Win, because it was a unilateral contract
Choice 3 Lose, because protecting the building’s offices was within the scope of Michael’s duties as a security guard
Choice 4 Lose, because Ivan could give Michael illegal investment advice
Ivan is a Wall Street executive who has a suite of offices on the twentieth floor of the New York Stock Exchange building in New York City. Michael is the general supervisor for Gotham Security, Inc., the security company that guards and monitors the building. As part of Michael’s job as supervisor, he makes rounds throughout the building each night at midnight, 2:00 A.M., 4:00 A.M., and 6:00 A.M. Although the rounds are thorough, Michael is not required to actually check each office in the building. Ivan does not like the fact that his suite of offices is not looked in on every night and he promises Michael that if Michael actually goes into the offices every time he makes rounds and makes sure that the drawers to all the desks and file cabinets are locked and the computers are closed, Ivan will give Michael free investment advice. For the next several weeks, Michael looks in on Ivan’s offices during each of his rounds. However, when Michael asks Ivan for investment advice, Ivan refuses to give it to him. If Michael sues Ivan for breach of contract, he will probably:
Choice 1 Win, because Michael does not have to go into any of the offices when he makes his rounds
Choice 2 Win, because it was a unilateral contract
Choice 3 Lose, because protecting the building’s offices was within the scope of Michael’s duties as a security guard
Choice 4 Lose, because Ivan could give Michael illegal investment advice
After a long game of tennis at the gym, Pete and Andre decide to go to the pool and cool off. Andre doesn’t know how to swim but he likes to wade into the shallow water. Pete knows that Andre can’t swim bud he decides to play a joke on Andre. While Andre is standing at the deep end of the pool, Pete pushes Andre into the water. Andre is having trouble keeping his head above the water and he begs Pete to help him out of the pool. Pete tells Andre that he will help him but only if Andre promises to give Pete $1,000. Afraid that he is going to drown, Andre agrees. After Pete helps Andre out of the pool, Andre refuses to give Pete the money. If Pete sues Andre to enforce their agreement, he will probably:
Choice 1 Lose, because Pete had a duty to help Andre out of the pool
Choice 2 Lose, because contract law does not allow for one party to capitalize on the misfortune of another party
Choice 3 Win, because the promise was unilateral so no mutuality was required
Choice 4 Win, because Pete performed his side of the agreement
Tucker is a car buff and he has designed a special model car that he commissions General Motors to build for him. G.M agrees to build the car to Tucker’s specifications, including Tucker’s insistence that the car be painted white with blue trim, in exchange for $500,000. G.M begins construction on the car but, before they finish the job, they inform Tucker that they will not complete construction unless Tucker agrees to pay G.M an additional $100,000. Tucker agrees and G.M finishes the car. When Tucker takes possession of the car, he refuses to pay the extra $100,000. If G.M. sues Tucker for the money, Tucker will probably:
Choice 1 Lose, because G.M finished the car in exchange for the promise of the extra $100,000
Choice 2 Lose, because he took possession of the car
Choice 3 Win, because Tucker did not receive any new consideration for this promise
Choice 4 Win, because G.M did not negotiate in good faith

Tucker is a car buff and he has designed a special model car that he commissions General Motors to build for him. G.M. agrees to build the car to Tucker’s specifications, including Tucker’s insistence that the car be painted white with blue trim, in exchange for $500,000. G.M begins construction on the car but, before they finish the job, Tucker informs them that he will pay an additional $100,000 for G.M to paint the car white with a black trim instead of a blue trim. G.M agrees and finishes the car. When Tucker takes possession of the car, he refuses to pay the extra $100,000. If G.M. sues Tucker for the money, Tucker will probably:
Choice 1 Lose, because G.M. agreed to provide a black trim in exchange for the promise of the extra $100,000
Choice 2 Lose, because he took possession of the car
Choice 3 Win, because Tucker did not receive any new consideration for this promise
Choice 4 Win, because G.M did not negotiate in good faith
Tucker is a race car buff whose life long dream is to race a car in the Daytona 500. Tucker has designed a special model race car that he commissions General Motors to build for him. G.M. agrees to build the car to Tucker’s specifications in exchange for $500,000. One of Tucker’s specifications is that the car be finished by April 1st so that Tucker can enter it into the Daytona 500, which will be held on May 1st. G.M begins construction on the car but, before they finish the job, Tucker’s father, who is anxious for his son to be able to fulfill his dream, informs G.M. that he will pay an additional $100,000 for G.M to finish the car by April 1st. G.M agrees and finishes the car. When Tucker takes possession of the car, his father refuses to pay the extra $100,000. If G.M. sues Tucker’s father for the money, they will probably:
Choice 1 Lose, because G.M. was already under a duty to have the car finished by April 1st
Choice 2 Lose, because they gave Tucker possession of the car
Choice 3 Win, because they have no contractual obligations to Tucker’s father
Choice 4 Win, because Tucker’s dad did not negotiate in good faith
American Beef is a meat packing company that gets a lot of its meat from England. On January 1st, 2003, American and English Beef, an English meat packing company, enter into a contract where American agrees to buy ten thousand pounds of beef from English for $4 per pound, to be delivered to American on February 1st. On January 10th, the United States government lifts a three year old ban on importing English beef. The ban had been put in place because of Mad Cow Disease fears. On January 15th, American agrees to pay $6 per pound for the ten thousand pounds of beef it had ordered from English. When the beef arrives, American pays $4 per pound and refuses to pay English the other $2 per pound. If English sues American, they will probably:
Choice 1 Win, because nobody forced American to increase their price offer
Choice 2 Win, because American had a valid defense for not fulfilling the original contract
Choice 3 Lose, because English did not negotiate in good faith
Choice 4 Lose, because there was no new consideration for American’s promise to pay $2 more per pound
American Beef is a meat packing company that gets a lot of its meat from England. On January 1st, 2003, American and English Beef, an English meat packing company, enter into a contract where American agrees to buy ten thousand pounds of beef from English for $4 per pound, to be delivered to American on February 1st. On January 10th, the English government announces that there has been an outbreak of Mad Cow Disease that has infected 40% of the meat packing industry. Because of the shortage of healthy cows, English has a very difficult time filling its customers’ orders. As a result, English must raise its prices to $9 per pound in order to stay in business. American and English modify their contract so that English will send American ten thousand pounds of beef and American will pay $9 per pound. After English sends the beef, American pays $4 per pound and refuses to pay the other $5 per pound. If English sues American, they will probably:
Choice 1 Lose, because English did not negotiate in good faith
Choice 2 Lose, because there was no new consideration for American’s promise to pay the extra $5 per pound
Choice 3 Win because, American did not have to increase their price offer
Choice 4 Win, because the outbreak and the subsequent price increase, was unforeseeable
Tony and Cornelius decide to open a cereal factory in their hometown in Michigan. On March 1st, 2003, Tony and Cornelius hire Bob the Builder to build the factory. They tell Bob that they would like to open the business on January 1st, 2004 and that they will pay him $5 million to have the factory finished by December 15th 2003. Bob begins construction but, on April 1st, he tells Tony and Cornelius that he will not finish the factory on time unless they agree to pay him an additional $2 million. At this point, it is still early enough in the project that Tony and Cornelius could find another contractor if they chose to and still have the factory finished by December 15th, 2003. However, they decide to keep Bob and they pay him the extra $2 million he is demanding. Bob finishes the factory by December 15th, as the contract required him to do. On December 16th, Tony and Cornelius sue Bob to get the extra $2 million back, arguing that there was no new consideration for their giving Bob the extra money since they received the same service that they had already contracted for in return. Tony and Cornelius will win this suit and recover the extra $2 million dollars they paid Bob:
True
False
Tony and Cornelius decide to open a cereal factory in their hometown in Michigan. On March 1st, 2003, Tony and Cornelius hire Bob the Builder to build the factory. They tell Bob that they would like to open the business on January 1st, 2004 and that they will pay him $5 million to have the factory finished by December 15th 2003. Bob begins construction but, on November 15th, he tells Tony and Cornelius that he will not finish the factory on time unless they agree to pay him an additional $2 million. At this point, it will be prohibitively expensive to find another contractor and still have the factory finished by December 15th, 2003. Further, any delay in opening the factory will cost Tony and Cornelius hundreds of thousands of dollars. Having no choice, Tony and Cornelius pay Bob the extra $2 million he is demanding. Bob finishes the factory by December 15th, as the contract required him to do. On December 16th, Tony and Cornelius sue Bob to get the extra $2 million back, arguing that there was no new consideration for their giving Bob the extra money since they received the same service that they had already contracted for in return. Tony and Cornelius will win this suit and recover the extra $2 million dollars they paid Bob:
True
False

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