BLTS-9E Issue Spotter Answers

BLTS-9E ISSUE SPOTTER ANSWERS CH. 11: CONSIDERATION, CAPACITY, AND LEGALITY

1A. In September, Sharyn agrees to work for Totem Productions, Inc., at $500 a week for a year beginning January 1. In October, Sharyn is offered the same work at $600 a week by Umber Shows, Ltd. When Sharyn tells Totem about the other offer, they tear up their contract and agree that Sharyn will be paid $575. Is the new contract binding? Explain.

Yes. The original contract was executory. The parties rescinded it and agreed to a new contract. If Sharyn had broken the contract to accept a contract with an- other employer, she might have been held liable for damages for the breach.

2A. Sun Airlines, Inc., prints on its tickets that it is not liable for any injury to a passenger caused by the airline’s negligence. If the cause of an accident is found to be the airline’s negligence, can it use the clause as a defense to liability? Why or why not?

No. Generally, An exculpatory clause (a clause attempting to absolve parties of negligence or other wrongs) is not enforced if the party seeking its enforcement is involved in a business that is important to the public as a matter of practical necessity, such as an airline. Because of the essential nature of these services, they have an advantage in bargaining strength and could insist that anyone contracting for their services agree not to hold them liable.