Jaime Marshall just graduated from law school. A midsize firm, Crenshaw & Rudolph, has hired him for a position in its contracts department. To become acquainted with the firms clients, Jaime spends his first week on the job reviewing several contracts: Contract A: A Hollywood celebrity has agreed to sell her 12-carat diamond ring to a Wall Street tycoon for $1.2 million. In the contract, the celebrity warrants that the ring is a one-of-a-kind design by a famous jewelry designer. Contract B: ABC Company has offered one of its salespeople, Rashida Moore, a $50,000 bonus if Rashida increases her annual sales by 25% in the calendar year. At the end of the calendar year, Rashida checks her sales numbers and finds that her sales have gone up by a whopping 32%. Contract C: A major tobacco producer promises to sell its entire crop to Smoke, Inc., a manufacturer of cigarettes. Contract D: A producer of luxury cars agrees to purchase all of the leather for its cars interiors from a leather producer in Texas.

QUESTIONS

1. In Contract A, what consideration is being exchanged?

2. Under Contract B, could Rashida successfully enforce her contract with ABC if the company refuses to pay her a $50,000 bonus?

3. Which type of contract is Contract C: an output contract, a requirements contract, or a best-efforts contract?

4. Which type of contract is Contract D: an output contract, a requirements contract, or a best-efforts contract?