Chapter 6: Exercises

1) Rebecca, in Honolulu, faxes a job offer to Spike, in Pittsburgh, saying, We can pay
you $55,000 per year, starting June 1. Spike faxes a reply, saying, Thank you! I
accept your generous offer, though I will also need $3,000 in relocation money. See
you June 1. Cant wait! On June 1, Spike arrives, to find that his position is filled by
Gus. He sues Rebecca.
a. Spike wins $55,000.
b. Spike wins $58,000.
c. Spike wins $3,000.
d. Spike wins restitution.
e. Spike wins nothing.
2) An aunt saw her eight-year-old enter the room, remarked what a nice boy he was, and
said, I would like to take care of him now. She promptly wrote a note, promising to
pay the boy $3,000 upon her death. Her estate refused to pay. Is it obligated to do so?
3) X Pty Ltd has several outstanding debts, including:
-

$50,000 owing to A,

$10,000 owing to B,

$5000 owing to C.

X pays A the sum of $25,000 on the understanding that A will not make any claims
against X for the balance of the $50,000 debts. A agrees to this arrangement in writing.
Later A suffers severe financial pressure and decides to claim the balance of the debt
owing by X.
Y Pty Ltd, a company that has connection with X pays B the sum of $2500 on the
understanding that B will not make any claims against X for the balance of the 10,000
debt. Later, B is suffering severe financial hardship and decides to claim the balance of
the debt owing by X.
C agrees to accept a sweepstake ticket in Melbourne Cup in settlement of the debt. Later
C thinks that the ticket was not sufficient and wants repayment of half the $5000 debt in
addition to the ticket. Would A, B, C be successful?

4) Albert is a builder. Bea is the owner of a block of land upon which she intends to
build a house. Albert and Bea enter into a contract for Albert to build a house for
$75,000. The contract contains no provision for the price to increase in line with
prices rises in materials. The price of material rises significantly. Albert wants an
extra $10,000 to continue. Bea agrees and Albert builds the house. Does Bea have to
pay the extra $10,000?
5) Explain the difference between judicial restraint activism and judicial activism in
contract law.
6) The McAllisters had several serious problems with their house, including leaks in the
ceiling, a buckling wall and dampness throughout. They repaired the buckling wall by
installing I-beams to support it. When they decided to sell the house, they said nothing
to prospective buyers about the problems. They stated that the I-beams had been
added for reinforcement. The Silvas bought the house for $60,000. Soon afterward,
they began to have problems with leaks, mildew, and dampness. Are the Silvas
entitled to any money damages? Why or Why not?