ALTERNATE CASE PROBLEM ANSWERS
CHAPTER 13
CONSIDERATION
13-1A. Contract modification
Yes. Stating that the adequacy of consideration must be determined at the time a contract is
agreed on, and not from the hindsight of how parties fare under it, the court explained that
13-2A. Preexisting duty
13-3A. Detrimental reliance
Yes. Even though no contract was ever signed, Red Owl was liable to the Hoffmans for the
damages they suffered. Red Owl made a number of promises and assurances, which the
13-4A. Accord and satisfaction
13-5A. Adequacy of consideration
The beneficiary’s claim that the terms of “$10 and other valuable consideration” were insufficient
to support a contract was deemed by the court to have no merit. The court held that the
consideration included the inducement of Nicholas to remain as chief executive officer of the
13-6A. Past consideration
The question suggests that under different circumstances than existed in this case, Cornwell’s
initial hiring could have constituted consideration for his signing of the confidentiality agreement.
13-7A. Preexisting duty
The court concluded that the modification of the contract between Rock Services and Empire
was valid, and awarded Rock Services the amount owing under the modification. Empire
appealed. The state intermediate appellate court affirmed the judgment of the trial court. The
appellate court acknowledged that “[a] modification of an agreement must be supported by valid
consideration and requires a party to do, or promise to do, something further than, or different
APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 13 B-3
13–8A. Past consideration
The non-compete agreement fails for lack of consideration. Promises made in return for actions
that have already taken place are unenforceable. They lack consideration because the element
of bargained-for exchange is missing.
1. As a general rule, the law presumes that persons signing contracts or any other
documents know what they are signing. In the case of Widener and Mozumder, both men were
2. Some exceptions are made to the rule that people are presumed to know the contents
3. In answering this question, the first factor you will want to consider concerns the
B-4 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 13
4. Increasingly in the last decade or so, firms have offered early retirement options to
employees as a compromise solution to an ethical dilemma. On the hand, to increase efficiency
and profit margins, firms often need to consolidate operations or weed out unnecessary
personnel. On the other hand, firms have both a duty to deal fairly with employees who have
proved their loyalty and competence and a need to protect themselves from potential liability for
wrongful discharge, under both statutory and common law. Early retirement and benefits