Module 8

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Toronto Metropolitan University *

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122

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Law

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Apr 3, 2024

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docx

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9

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1. Chapter 8 - Cases & Problems - Q2 - Goldberg Conservatory The Goldberg Conservatory, a music school, ran a notice in several newspapers to announce that it had decided to have a new organ built and installed on its premises. The notice also asked for donations to help fund the project. John Sebastien, a local businessman and patron of the arts, responded to the notice by immediately promising the Conservatory that he would donate $100,000. He explained that a cheque would be sent within a month, after he had made suitable arrangements with his accountant. Before he was able to send a cheque, however, Sebastien’s finances suffered a severe setback as a result of several failed business ventures. He therefore informed the Conservatory that, with regret, he would not be able to make a donation after all. The Conservatory insists that he no longer has a choice in the matter. While admitting that it had planned to acquire the organ in any event, it says that it would be unfair if it were to be deprived of the money that Sebastien had promised. It also says that Sebastien is legally obligated to fulfill his promise. Is Sebastien’s promise enforceable? Issue: Sebastian made a promise to donate $100,000 to the Conservatory. However, due to a financial loss, he is unable to fulfill this donation. The Conservatory claims that Sebastian is legally obligated to fulfill his promise, prompting the question of whether the promise is enforceable. Rule: Consideration exists when a party gives or promises to give a benefit to someone else. In a gratuitous promise, enforceability is limited as there is no exchange of legal value. Without bargaining, a contract cannot be established. Application: Sebastian's promise to donate to the Goldberg Conservatory lacks any indication of exchange between the parties, rendering it non-enforceable. However, the Conservatory could argue that Sebastian's promise creates an obligation, as it would be unjust for him not to fulfill it. Additionally, the Conservatory had acquired the organ prior to Sebastian's promise, indicating that it was not contingent upon his donation. Conclusion: The promise to donate is unenforceable because the Goldberg Conservatory did not provide consideration, nor did Sebastian promise to provide a benefit to the Conservatory.
2. Chapter 8 - Cases & Problems - Q4 - Tammy Braithwait (legal fees) After being charged with a serious crime, Anthony Lampleigh wrote to Tammy Braithwait, a lawyer, asking for assistance. After setting out the facts of the case and the precise nature of the allegations against him, Lampleigh asked in his letter to Braithwait, “Will you please help me avoid prosecution on these charges?” Braithwait wrote back in very simple terms, stating merely that she would “do everything possible to achieve the desired result.” Braithwait then used considerable ingenuity, and expended considerable time and expense, in persuading the government to drop the charges against Lampleigh. When Braithwait conveyed that news, Lampleigh gratefully said, “Thank you so much. For your efforts, I will prepare a cheque for $25,000 and have it delivered to your office tomorrow.” In fact, Lampleigh never sent any cheque to Braithwait. After the initial joy and relief wore off, Lampleigh felt far less thankful and he now refuses to pay anything at all. Braithwait insists that she is entitled to a contractual payment of $25,000, but Lampleigh argues that his promise of that amount was given in exchange for past consideration and therefore is not enforceable. How would a court resolve the parties’ dispute? Issue: Lampleigh claims that his promise was given in exchange for past consideration and therefore is not enforceable. How would a court resolve the parties' dispute? Rule: Past consideration refers to something that a party did before the formation of a contract. Application: In this case, the parties exchanged promises and established a complete contract. Lampleigh requested Braithwait to perform a service for him and promised to pay him in return. Although the consideration may be in the past, as the mention of the check came after the service, Lampleigh's request for a professional service implies an obligation to pay. Conclusion: The court would likely find Lampleigh obligated to pay, as the promise is enforceable due to the consideration provided by Braithwait's service. 3. Chapter 8 - Cases & Problems - Q7 - Christine Robinson Christine Robinson owed a debt of $25,000 to Black Crow Music Inc (BCMI). Because she genuinely could not pay the full amount, Christine asked the company whether it would be willing to accept $15,000 in complete discharge of the obligation. The company initially took pity on Christine after she demonstrated her seriousness by placing her request in a document under seal. It therefore agreed to her proposal, on the condition that she pay $15,000 within one week. Three days later, however, BCMI had a change of heart and told Christine that it expected to receive the full sum of $25,000. Three days after that, Christine presented $15,000 to BCMI. The company took the cash, but only after repeating its intention to collect on the entire debt. Christine, however, believes that she is debt-free and that BCMI no longer has any claim to the outstanding $10,000. Which party is correct? Explain your answer.
Issue: Christine believes that she is debt-free and that BCMI no longer has any claim to the outstanding $10,000, which contrasts with BCMI's change of heart where they expect Christine to still pay the full amount. Rule: A seal is not considered a traditional form of consideration, but it serves as a substitute or proxy for consideration. Consequently, it may bind a party to an agreement even in the absence of conventional consideration from the other party. Application: In this case, Christine provided the seal, but it holds no legal weight as it is typically the responsibility of the recipient to provide it. Therefore, it is essentially ineffective. Moreover, BCMI's demand for the full $25,000 negates any potential benefit they could derive from Christine's seal. Conclusion: BCMI will only be precluded from demanding payment of the outstanding $10,000 if it made its promise under seal. Given that Christine provided the seal, it doesn't effectively bind BCMI. Moreover, BCMI's insistence on the full payment suggests they did not intend to waive the remaining debt. Therefore, Christine's belief that she is debt-free is incorrect; BCMI still has a valid claim to the outstanding $10,000. 4. Chapter 8 - Cases & Problems - Q8 - Everlast Tire Everlast Tire Co, which manufactures automobile tires, sold a shipment of tires to Automotive Wholesaler Inc. Under the terms of that contract, Automotive Wholesaler was allowed to resell the tires below the price suggested by Everlast if (i) the sub-buyer was a business in the car industry, and (ii) the sub-buyer promised not to resell below the price suggested by Everlast. Automotive Wholesaler then sold the tires to AJ’s Used Cars Ltd. Under the terms of that contract, AJ’s, which was engaged in the car industry as a used-car dealer, promised Automotive Wholesaler that it would not re-sell the tires below the price suggested by Everlast. AJ’s also promised Automotive Wholesaler that if it broke that promise, it would pay $100 to Everlast for each tire that was sold below the manufacturer’s suggested price. In fact, AJ’s did sell 10 tires to individual customers at prices that were well below the price suggested by Everlast. Everlast now argues that it is entitled to recover $1,000 from AJ’s. Is that true? If not, does the result seem fair? And if not, what are the simplest means by which Everlast could have arranged the resale of its tires so that it would be able to enforce the promise that AJ’s made to Automotive Wholesaler?
Issue: The issue at hand is whether Everlast Tire Co. is entitled to recover $1,000 from AJ's Used Cars Ltd for selling tires below the manufacturer's suggested price, as stipulated in the contract between AJ's and Automotive Wholesaler Inc. Rule: In order for Everlast to recover from AJ's, there must be a valid contractual relationship or legal basis for such recovery. The relevant contractual arrangements are: 1. Contract between Everlast and Automotive Wholesaler: This contract permits Automotive Wholesaler to resell tires below the suggested price under certain conditions, but it does not directly confer rights upon Everlast against AJ's. 2. Contract between Automotive Wholesaler and AJ's: AJ's promised not to resell the tires below the suggested price and agreed to pay Automotive Wholesaler $100 per tire for any breach of this promise. Application: Everlast's claim against AJ's hinges on the existence of a direct contractual relationship or a legal basis for enforcement. However, there is no direct contract between Everlast and AJ's. Instead, the contract exists between AJ's and Automotive Wholesaler, where AJ's promised to abide by certain pricing terms. AJ's breached this promise by selling tires below the suggested price, leading to potential liability to Automotive Wholesaler. However, Everlast's claim against AJ's is not supported by the existing contractual arrangements. Conclusion: Everlast is not entitled to recover $1,000 from AJ's for selling tires below the suggested price. The lack of a direct contractual relationship between Everlast and AJ's, combined with the absence of a legal basis for enforcement, precludes Everlast from seeking damages directly from AJ's in this scenario. However, the result may not seem fair to Everlast, as its pricing policies are being undermined. To better enforce pricing terms in future transactions, Everlast could incorporate provisions such as direct contracts with downstream buyers or indemnification clauses in its contracts with intermediaries like Automotive Wholesaler. These measures would enhance Everlast's ability to protect its pricing policies and ensure compliance throughout the resale chain.
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