Business Law I: Chapter 12-Consideration, Capacity, and Legality-Cases Assessment Test Questions And Detailed Correct Answers.

Hamer v. Sidway - correct answer Facts: A man promised his nephew that if he stopped drinking, smoking, and gambling until he was 21 that he would pay him $5000. When the nephew completed this agreement the uncle told him that he would hold onto the money and let it collect interest. When the uncle died Sidway, the executor to the uncles estate woudl not pay the money to Hamer, who now own the claim to the money, under the fact that he did not have consideration. Issue: did the original agreement show any consideration. in a agreement one must give up something. Decision: the court ruled in favor of Hamer because the legal rights given up by the nephew are enough to satisfy consideration. Thomas v. Archer Case - correct answer - Rachel Thomas was admitted to the emergency room at Ketchikan General Hospital for a pregnancy related complications - Her attending physician, Sarah Archer determined that Thomas was at risk of premature delivery and needed an immediate transfer via medevac to a medical facility better equipped to handle her condition · Weather conditions so bad in Alaska, Archer recommended transferring to Seattle - Rachel and her husband told Archer they needed preauthorization form Health Clinic and Alaskan Medical Center in order to be insured for treatment outside of Alaska's facilities and that Archer would take care of this and if they couldn't "we" will take care of it (aka the hospital will) - Steven (husband) signed a form title "Acknowledgment of Financial Responsibilities" which noted the medevac by Guardian Flight could be very costly · Form named KIC as the "Payment Source" · But Steven signed and agreed to be personally responsible for any unpaid charges from the flight and to "save and hold the hospital harmless therefrom" - Thomas's received bills which totaled $23,000 and more than $69,000 from Guardian and when they sought payment from KIC and ANMC for their insurance plan, they were denied b/c Thomas's failed to request preauthorization within 72 hours of beginning the treatment - They admitted that arranging preauthorization was their responsibility, but Dr. Archer's claim before they boarded the flight and that someone else would arrange for the preauthorization requirements - Thomas's sued b/c they didn't pay them back for their bills and sued them under PROMISSORY ESTOPPEL - Trial court: summary judgment to the hospital and Dr. Archer (Thomas's appeal b/c they shouldn't have rejected promissory estoppel) - B/c the Thomas's identified issues of fact that precluded summary judgment, it was error to grant the USS-POSCO Industries v. Case - correct answer bargained for exchange Case voluntarily enrolled in a 3-year, employer-sponsored educational program to become a maintenance technical worker. His employer, USS-POSCO Industries (UPI), agreed to pay the upfront costs of the program. Case agreed that if he quit his job within 30 months of completing the program, he would reimburse UPI a prorated portion of the $46k cost of the program. 2 months after completing the program, he left UPI to work for Lawrence Livermore National Laboratory as a high-voltage electrician and refused reimburse UPI, resulting in a suit from UPI for breach of contract. Court granted UPI's motion for summary of judgement on both appeals, and a state intermediate appellate court affirmed the lower court's summary of judgement in UPI's favor. Blackmon v. Iverson - correct answer Blackmon suggest the name "The Answer" to Allen Iverson, later, Iverson said he would give Blackmon 25% of any proceeds from the merchandising of the name. Iverson's promise was made in return for past consideration and was unenforceable. Already, LLC v. Nike, Inc. - correct answer Nike sued Already for trademark infringements. Already filed a counterclaim, contending that the Nike trademark was invalid.While the suit was pending, Nike issued a covenant not to sue, promising not to raise any trademark claims against Already. Nike then filed a motion to dismiss its own claims and to dismiss Already's counterclaim. Already opposed the dismissal of its counterclaim Decision: The court granted Nike's motion, Already appealed. The U.S. Court of Appeals for the Second Circuit affirmed. Already appealed again; Supreme Court affirmed the judgment of the lower courts BH 329 NB v. CRBE, Inc. - correct answer CBRE, Inc. was selling commercial real estate owned by API Foils, Inc. BH 329 NB offered to buy it for $7.5m in which CBRE accepted. The company later signed a letter of intent setting forth the sale's terms, including the purchase price and an agreement to lease back the property to API for one year, in which API signed the letter of intent, showing its agreement in principle to the deal. CBRE promised it wouldn't market/accept other offers while the parties were closing the deal, but continued to market the property and eventually received a higher offer from a different buyer, notifying them that it no longer had a deal with API, resulting a suit form BH 329 NB. A federal district court dismissed the contract claim but allowed the promissory estoppel claim to go forward. PAK Foods Houston, LLC v. Garcia - correct answer S.L., a 16 year old minor worked for KFC operated by PAK Foods Houston, LLC. PAK Foods' policy was to resolve any dispute with an employee through arbitration. S.L. signed an acknowledgment of this policy. S.L. was injured on the job, and terminated her employment. She filed a suit against PAK to recover medical expenses for the injury. PAK filed a motion to compel arbitration, which the court denied. They appealed and lost because S.L. had the right to disaffirm the agreement since she was a minor. Black v. Duffie - correct answer Duffie was mildly mentally retarded and was beginning to suffer from dementia at age 70, and lived with her brother for her entire life. When he died, she has his property, valued at more than $400k. Less than 3 months later, she signed a deed granting her interest in the tract to Charles and Joanne Black. They promised to pay her $150,000 in monthly payments of $1,000. Jack, Annabelle's nephew, was appointed to be her guardian. He filed a suit on her behalf in an Arkansas state court against Black, seeking to void the land deed because of her lack of mental competence, and the court ordered the Blacks to return the property. Blacks appealed, and the state intermediate court affirmed, stating that she lacked the cognitive ability to make the complex financial decisions involved in selling property, making the contract voidable. Brown & Brown, Inc. v. Johnson - correct answer The insurance firm in NY City, hired Johnson to perform actuarial analysis. On her first day of work, she was asked to sign a nonsolicitation covenant, which prohibited her from soliciting or serving any of Brown's clients for 2 years after the termination of her employment. Less than 5 years later, when her employment with Brown was terminated, she went to work for Lawley Benefits Group, LLC, and Brown sued her to enforce the covenant. A state appellate court ruled that the covenant was overly broad and unenforceable because it attempted to restrict her from working for any of Brown's clients, without regard to whether she had a relationship with those clients. Brinkley v. Monterey Financial Services, Inc. - correct answer Brinkley committed to take 6 real estate investment training sessions at a cost of $4,195 and paid $850 and signed a retail installment contract promising to pay monthly payments on the balance to Monterey Financial Services. The contract contained an arbitration agreement, and a dispute arose, she stopped making payments and filed a lawsuit against Monterey in a California state court. Brinkley appealed after the court granted Monterey's motion to arbitrate, arguing that the arbitration clause was procedurally unconscionable because it was part of an adhesion contract, but the court found that the arbitration clause was enforceable and dismissed the lawsuit. Holmes v. Multimedia KSDK, Inc. - correct answer exculpatory clause Holmes participated in the Susan G. Komen Race for the Cure in St. Louis. Her signed entry form included an exculpatory clause under which Homes agreed to release the event sponsors from liability "for any injury or damages I might suffer in connection with my participation in this event". Holmes sustained injuries when she tripped and fell over an audiovisual box left on the ground by one of the sponsors, filing a negligence suit against the sponsor whose employees had placed the box on the ground without barricades/warnings, but the court held that the language used in the exculpatory clause clea