Chapter_12_Answers_to_Problems - C HAPTER12 CONSIDERATION 1...

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CHAPTER 12 CONSIDERATION 1 ANSWERS TO PROBLEMS CHAPTER 12 1. In consideration of $1800 paid to him by Joyce, Hill gave Joyce a written option to purchase his house for $180,000 on or before April 1. Prior to April 1, Hill verbally agreed to extend the option until July 1. On May 18, Hill, known to Joyce, Answer: Bargained-for Exchange . No. Consideration was paid to Hill for holding the property for the specified time subject to the right of Joyce to exercise the option whether to buy or not. When the time limit expired, the contract was at an end and the right under the option was extinguished. Of course, if that right were extended by some valid binding agreement, then it could be enforced. Joyce did not attempt to exercise the option and complete a contract of purchase within the time limited by the written agreement. It is true that before the expiration of the time stated, Hill verbally agreed or promised to extend the time for the exercise of the option from April 1 to July 1, and that it was within this latter or extended period and after the property had been sold and conveyed to Gray that Joyce presented himself ready to accept the property and pay the price. However, such acceptance came too late. There was no consideration for the verbal promise or agreement to extend the time, and such promise was therefore not enforceable. After April 1 the verbal agreement operated simply as a mere offer continuing until withdrawn or otherwise ended by some act of the offeror, Hill. The sale to Gray was known to Joyce and resulted in a revocation of the offer. ( NOTE: In addition, the Statute of Frauds would require an extension of the option to be in writing because such an option deals with an “interest in” or “concerns” land.) 2. (a) Ann owed $500 to Barry for services Barry rendered to Ann. The debt was due June 30, 2007. In March 2008, the debt was still unpaid. Barry was in urgent need of ready cash and told Ann that if she would pay $150 of the debt at once, Barry would release her from the balance. Ann paid $150 and stated to Barry that all claims had been paid in full. In August 2008, Barry demanded the unpaid balance and subsequently sued Ann for $350. Result? (b) Modify the facts in (a) by assuming that Barry gave Ann a written receipt stating that all claims had been paid in full. Result? (c) Modify the facts in (a) by assuming that Ann owed Barry the $500 on Ann's purchase of a motorcycle from Barry. Result? Answer: Settlement of an Undisputed Debt . (a) Decision for Barry. As this debt arose out of a contract for services, the common law of contracts would apply. At common law the payment of a lesser sum of money in full satisfaction of a liquidated, undisputed debt in a greater amount is legally insufficient consideration for a promise of the creditor to discharge the entire debt. There is no legal detriment to the promisee or legal benefit to the promisor. UCC:
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Chapter_12_Answers_to_Problems - C HAPTER12 CONSIDERATION 1...

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