Contracts & Sales

QIf Seller agrees to sell his horse Buck for one dollar and subsequently learns that Buck is quite valuable, can seller avoid the contract for lack of consideration?
ANo. Lack of consideration is a narrow defense. In this case, there is consideration, even though it is only one dollar. Adequacy of consideration is never a defense – there must be absolutely no consideration whatsoever in order for a lack of consideration defense to succeed.
Q John was mowing his lawn, and ended up also mowing his neighbor Jake’s lawn. The next day, Jake promises John that he will pay him $50 for his work. Has a contract been created?
ANo, past consideration is not valid consideration. Past consideration is a benefit that is already conferred, and therefore cannot be part of a present bargain.
QBrad owed Alex $1,000, but went through a bankruptcy and had the obligation discharged. A couple years later Brad, feeling bad about not having paid the debt, sent Alex a signed letter promising to pay him $1,000. Can Alex enforce the promise?
AYes. Although it would seem there is no consideration, where a party has a moral obligation and makes a promise in a signed writing, an enforceable obligation is created.
QFred has agreed to paint John’s house for $1,000. Half way through painting, Fred says that he cannot complete the project for anything less than $1500. John agrees and Fred finishes the house. Can John avoid paying the extra $500?
AYes. Under common law, a contract modification requires consideration in order to be enforceable. 

Pre-Existing Duty Rule: A pre-existing duty can not be consideration to the party to whom the duty is owed. In this case, John is already obligated to paint the house, so finishing the job is a pre-existing duty and cannot be consideration for the $500 price increase.

QSame facts as the previous question, except that this time John’s neighbor agrees to pay Fred the extra $500 if Fred finishes painting John’s house. If Fred comes to the neighbor for the money, can the neighbor successfully avoid the contract on account of the fact that Fred had a pre-existing duty to paint the house?
ANo. The pre-existing duty rule does not apply where the duty is to another party. Fred’s duty was initially to John – when John’s neighbor agreed to pay $500, Fred then also had a separate duty to the neighbor. Therefore Fred can recover the $500 from the neighbor.
 

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