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Exam 9: Consideration, Capacity, and Legality

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Question 31

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While biking, Jolene is injured when Kirby carelessly causes them to crash. Kirby's insurance company offers Jolene $50,000 to release Kirby from liability, and she accepts. Later, Jolene learns that her injuries are more serious than she realized. The release is​

A) ​enforceable.
B) ​unenforceable because Jolene's injuries are unforeseeably difficult.
C) ​unenforceable because Kirby has a preexisting duty to pay.
D) ​unenforceable because the release is an illusory promise.

E) B) and C)
F) C) and D)

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Question 32

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Parties are usually free to bargain as they wish.​

A) True
B) False

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Question 33

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A covenant not to compete is enforceable only if it is necessary to restrain trade.​

​Intoxicated but capable of comprehending the consequences of her actions, Cricket signs a contract to sell her phone app design to Download, Ltd. This contract is

Service Corporation markets its service to less educated consumers. In considering the unconscionability of a Service contract, a court will likely consider all of the following except​

Fact Pattern 9-2 Sal contracts with Tasty Pizza to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract. -Refer to Fact Pattern 9-2. Sal and Tasty​

Fagin and Gage agree to hijack a truck carrying a load of almonds. If Fagin later refuses to go through with the crime, Gage can​

Holly, a real estate broker licensed only in Iowa, concludes a sale of farmland in Illinois. Holly can​

Essentially, adequacy of consideration concerns the fairness of the bargain.​

Fact Pattern 9-2 Sal contracts with Tasty Pizza to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract. -Refer to Fact Pattern 9-2. The next day, Sal changes his mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sal and Tasty​

Centre City Properties, Inc., owns and manages a warehouse. DIY Home Improvement Stores agrees to lease the warehouse for six years. Under the lease, DIY is obligated to pay all of the utility costs. Two years into the term, DIY asks Centre City to modify the lease to provide that the utility costs will be split equally between them. The landlord agrees, but later decides it does not want to share the costs and refuses to pay. Is Centre City bound to its agreement to share the utility costs? Why or why not?​

A release does not require consideration to be legally binding.​

A court adjudicates Henry mentally incompetent and appoints Inez to be his guardian. Later, without Inez's knowledge, Henry signs a contract to sell his farm to Jason for its real market value. The contract is​

Baylor obtains a loan from City Bank at 24.5 percent interest. Their state's usury statute limits interest rates to a 22.0 percent maximum. Baylor's contract with the bank is enforceable only if​

Stephen offers Theresa $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely​

A promise made in return for an act or event that has not yet taken place can be fully enforceable.​

Omni Insurance Company violates a state licensing statute when selling a policy to Petra, in whose state Omni is not licensed to sell insurance. As a member of the class of persons protected by the statute, Petra can​

Oscar owns Payroll Company, a bookkeeping service. Oscar pays Remy $5,000 to steal a list of a competitor's clients, to whom Oscar will aggressively market Payroll's services. This deal is​

Fact Pattern 9-1 Sports Bar & Grill and Tea & Tarts Bakery are adjacent businesses with adjoining parking lots. Sports Bar offers Tea & Tarts a discount on purchases if the bakery will not tow the cars of Sports Bar's patrons who park in the bakery's lot. ​ -Refer to Fact Pattern 9-1. Sports Bar's discount is legally sufficient consideration​

Under a contract with Valley Vineyard, Walsh begins grading a terraced hillside for the planting of grapes. Halfway through the project, Walsh asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." Valley agrees but later refuses to pay. Valley's agreement to pay more is​