Question 1

Carrie promises Tim she will clean his house and in exchange, Tim promises to pay Carrie $50. This is an example of what type of contract?

Accepted Answer

A)  A unilateral contract 
B)  A bilateral contract 
C)  An implied contract 
D)  A contract created through promissory estoppel 
E)  An invalid contract 
A)  A unilateral contract 
B)  A bilateral contract 
C)  An implied contract 
D)  A contract created through promissory estoppel 
E)  An invalid contract

Question 2

Partial payment of a debt is never valid consideration.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following was the judge's ruling in Jamil Blackmon v. Allen Iverson, the case in the text in which the plaintiff alleged that the defendant, a professional athlete, wrongfully failed to pay him a percentage of proceeds received from using the nickname "The Answer" in merchandising although the defendant agreed to do so after the plaintiff suggested the use of the nickname?

Accepted Answer

A)  That consideration was lacking because the defendant was not bound to use the nickname. 
B)  That the defendant's promise to pay was past consideration insufficient to create a binding contract. 
C)  That consideration was present and that the defendant was liable to the plaintiff. 
D)  That the issue of consideration was irrelevant because consideration was not required in this type of contract. 
E)  That the defendant was required to pay the plaintiff only half of the percentage initially offered because a gift situation was involved. 
A)  That consideration was lacking because the defendant was not bound to use the nickname. 
B)  That the defendant's promise to pay was past consideration insufficient to create a binding contract. 
C)  That consideration was present and that the defendant was liable to the plaintiff. 
D)  That the issue of consideration was irrelevant because consideration was not required in this type of contract. 
E)  That the defendant was required to pay the plaintiff only half of the percentage initially offered because a gift situation was involved.

Question 4

When are promises based on past consideration enforceable?

Accepted Answer

A)  Never 
B)  When enforcement is necessary to avoid injustice 
C)  When an illusory promise is made 
D)  When a sale of goods is involved 
E)  Always 
A)  Never 
B)  When enforcement is necessary to avoid injustice 
C)  When an illusory promise is made 
D)  When a sale of goods is involved 
E)  Always

Question 5

Loren and Izra's contract is in dispute. Loren makes an offer to accept less money than the parties agreed on and Izra pays the new amount. Loren and Izra have completed a(n) ________.

Accepted Answer

A)  satisfactory past consideration contract 
B)  detrimental reliance contract 
C)  accord and satisfaction 
D)  compliance agreement 
E)  acknowledged change order 
A)  satisfactory past consideration contract 
B)  detrimental reliance contract 
C)  accord and satisfaction 
D)  compliance agreement 
E)  acknowledged change order

Question 6

________ is what a person receives in return for performing a contract obligation.

Accepted Answer

A)  Consideration 
B)  Accent 
C)  Accord 
D)  Money 
E)  Accession 
A)  Consideration 
B)  Accent 
C)  Accord 
D)  Money 
E)  Accession

Question 7

Tyler and Laura are arguing over the key difference between a bilateral and a unilateral contract. The key difference in these two types of contracts is ________.

Accepted Answer

A)  the type of consideration. 
B)  a bilateral contract requires consideration and a unilateral does not. 
C)  a unilateral contract requires consideration and a bilateral does not. 
D)  the adequacy of consideration. 
E)  promissory estoppel must be present in a unilateral contract. 
A)  the type of consideration. 
B)  a bilateral contract requires consideration and a unilateral does not. 
C)  a unilateral contract requires consideration and a bilateral does not. 
D)  the adequacy of consideration. 
E)  promissory estoppel must be present in a unilateral contract.

Question 8

What can a business do to protect itself from a debtor's attempt to create an accord and satisfaction by sending the creditor a check with "paid in full" written on it?

Accepted Answer

A)  Nothing. Businesses must carefully review every check to avoid inadvertently creating an accord and satisfaction. 
B)  Issue only liquidated debts to debtors and include provisions in credit card statements prohibiting the issuance of unliquidated debt. 
C)  Rely on the doctrine of promissory estoppel to ensure such checks are not valid. 
D)  Notify debtors that any attempt to settle a claim for less than the amount owed must be sent to a particular address and/or a particular person. 
E)  Sue the debtor for the remaining balance and argue there was insufficient consideration because there was no bargained-for exchange when the check was sent "Paid in Full." 
A)  Nothing. Businesses must carefully review every check to avoid inadvertently creating an accord and satisfaction. 
B)  Issue only liquidated debts to debtors and include provisions in credit card statements prohibiting the issuance of unliquidated debt. 
C)  Rely on the doctrine of promissory estoppel to ensure such checks are not valid. 
D)  Notify debtors that any attempt to settle a claim for less than the amount owed must be sent to a particular address and/or a particular person. 
E)  Sue the debtor for the remaining balance and argue there was insufficient consideration because there was no bargained-for exchange when the check was sent "Paid in Full."

Question 9

Lance contracts with Herman to fix the brakes on his car. The agreed upon amount is $750. When Herman is fixing the brakes, he notices that a wheel bearing needs replacement because it is completely broken. When Lance picks up his car the bill is $900. Lance says he will not pay this amount but the agreed upon $750. This is considered a(n) ________ debt.

Accepted Answer

A)  disputed 
B)  unacknowledged 
C)  unaccepted 
D)  liquidated 
E)  unliquidated 
A)  disputed 
B)  unacknowledged 
C)  unaccepted 
D)  liquidated 
E)  unliquidated

Question 10

A promise to do something that you are already obligated to do is ________.

Accepted Answer

A)  illusory consideration 
B)  valid consideration only in the employment context 
C)  past consideration 
D)  a preexisting duty 
E)  promissory estoppel 
A)  illusory consideration 
B)  valid consideration only in the employment context 
C)  past consideration 
D)  a preexisting duty 
E)  promissory estoppel

Question 11

When will the court consider adequacy of consideration?

Accepted Answer

A)  Never. 
B)  If the court believes fraud or undue influence occurred. 
C)  If the plaintiff petitions the court to consider adequacy of consideration. 
D)  If the defendant petitions the court to consider adequacy of consideration. 
E)  In every breach of contract case. 
A)  Never. 
B)  If the court believes fraud or undue influence occurred. 
C)  If the plaintiff petitions the court to consider adequacy of consideration. 
D)  If the defendant petitions the court to consider adequacy of consideration. 
E)  In every breach of contract case.

Question 12

In a(n) ________, the consideration for each promise is a return promise.

Accepted Answer

A)  unilateral contract 
B)  bilateral contract 
C)  acknowledgement 
D)  promise 
E)  promissory estoppel 
A)  unilateral contract 
B)  bilateral contract 
C)  acknowledgement 
D)  promise 
E)  promissory estoppel

Question 13

[Car Trouble] Jennifer wants to sell her car and Timmy agrees to purchase it. Jennifer and Timmy become involved in an over-the-phone negotiation and settle on a price of $1,000. Jennifer lives three hours from Timmy but agrees to deliver the car to him in his home state and take the bus back, provided Timmy promises to purchase the vehicle. She drives three hours. Upon arrival, Timmy says he will not purchase the vehicle unless Jennifer agrees to go to the dealer, get a second set of $500 SmartKeys, and mail the keys to Timmy within three weeks. Having driven all that way, Jennifer agrees. Timmy gives Jennifer the $1,000, using money he borrowed from Joe and promised to repay. Jennifer accepts the money and leaves. Jennifer never sends Timmy the second set of keys. Timmy later decides the car is worth only $500. He decides not to pay Joe and instead gives the vehicle to Joe, explaining his plan. Joe accepts the car and drives away, secretly planning to sue Timmy for the rest of the money. When Timmy is sued by Joe, he makes a claim against Jennifer and claims she should have to compensate him for losses because they never had a valid contract since the car was not worth the $1,000 Jennifer claimed it was.
-Did Jennifer and Timmy have a valid contract?

Accepted Answer

A)  No, because the car was not worth what Timmy paid for it. 
B)  No, because Jennifer did not send the second set of keys back to Timmy. 
C)  Yes, because there was a bargained-for exchange and a mutual exchange of promises. 
D)  Yes, because of promissory estoppel. 
E)  Yes, because of the UCC. 
A)  No, because the car was not worth what Timmy paid for it. 
B)  No, because Jennifer did not send the second set of keys back to Timmy. 
C)  Yes, because there was a bargained-for exchange and a mutual exchange of promises. 
D)  Yes, because of promissory estoppel. 
E)  Yes, because of the UCC.

Question 14

Ronaldo says to Becky "I would like to make you my full-time business law tutor." Becky responds that she will think about it and let him know after she talks to Barry who also asked her to be a business law tutor. This is an example of:

Accepted Answer

A)  a valid contract 
B)  an illusory promise 
C)  past consideration 
D)  a preexisting duty 
E)  detrimental reliance on Ronaldo's part 
A)  a valid contract 
B)  an illusory promise 
C)  past consideration 
D)  a preexisting duty 
E)  detrimental reliance on Ronaldo's part

Question 15

Past consideration generally qualifies as consideration.

Accepted Answer

A) True 
 B)False

Question 16

If there is no dispute about the fact that money is owed and the amount of money owed in a contract, this is considered a(n) ________ debt.

Accepted Answer

A)  actual 
B)  accepted 
C)  positive 
D)  liquidated 
E)  unliquidated 
A)  actual 
B)  accepted 
C)  positive 
D)  liquidated 
E)  unliquidated

Question 17

In a unilateral contract, the consideration for a promise is a[n] ________.

Accepted Answer

A)  Action 
B)  Return promise 
C)  Acknowledgement 
D)  Consideration 
E)  Agreement 
A)  Action 
B)  Return promise 
C)  Acknowledgement 
D)  Consideration 
E)  Agreement

Question 18

Which of the following is true regarding whether an accepted offer to pay part of a debt is consideration?

Accepted Answer

A)  Partial payment is consideration under all circumstances. 
B)  Partial payment is not consideration under any circumstances. 
C)  Partial payment is consideration if a liquidated debt is involved. 
D)  Partial payment is consideration if an unliquidated debt is involved. 
E)  Partial payment is consideration if an exception applies to the general rule that partial payment is not consideration for an unliquidated debt. 
A)  Partial payment is consideration under all circumstances. 
B)  Partial payment is not consideration under any circumstances. 
C)  Partial payment is consideration if a liquidated debt is involved. 
D)  Partial payment is consideration if an unliquidated debt is involved. 
E)  Partial payment is consideration if an exception applies to the general rule that partial payment is not consideration for an unliquidated debt.

Question 19

Bailey agrees to bathe and groom Keiko's dog, Fluffy, for $30. Bailey agreed to the price prior to seeing Fluffy, who is a large dog with lots of hair. Bailey tells Keiko that if she is going to groom Fluffy, the price will be $40. Keiko reluctantly agrees but tells Bailey that she should not have been surprised that a dog named Fluffy would have lots of hair. Bailey bathes and grooms Fluffy, but Keiko only pays her $30. Which of the following is correct regarding Bailey's entitlement to the extra $10?

Accepted Answer

A)  Bailey is entitled to the extra $10 because a valid bilateral contract existed. 
B)  Bailey is entitled to the extra $10 because a valid unilateral contract existed. 
C)  Assuming the unforeseen circumstances rule does not apply, Bailey is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy for $30. 
D)  Assuming the unforeseen circumstances rule does not apply, Bailey is not entitled to the extra $10 because Keiko's promise to pay $30 was illusory. 
E)  Assuming the unforeseen circumstances rule does not apply, Bailey is not entitled to the extra $10 because past consideration was involved. 
A)  Bailey is entitled to the extra $10 because a valid bilateral contract existed. 
B)  Bailey is entitled to the extra $10 because a valid unilateral contract existed. 
C)  Assuming the unforeseen circumstances rule does not apply, Bailey is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy for $30. 
D)  Assuming the unforeseen circumstances rule does not apply, Bailey is not entitled to the extra $10 because Keiko's promise to pay $30 was illusory. 
E)  Assuming the unforeseen circumstances rule does not apply, Bailey is not entitled to the extra $10 because past consideration was involved.

Question 20

Which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt when the debt itself, in its entirety, is in dispute, and the creditor agrees?

Accepted Answer

A)  A liquidated debt is involved, and there is an accord and satisfaction. 
B)  A liquidated debt is involved, and there is an accord but no satisfaction. 
C)  A liquidated debt is involved, and there is neither a satisfaction nor an accord. 
D)  An unliquidated debt is involved, and there is an accord and satisfaction. 
E)  An unliquidated debt is involved, and there is an accord but not satisfaction. 
A)  A liquidated debt is involved, and there is an accord and satisfaction. 
B)  A liquidated debt is involved, and there is an accord but no satisfaction. 
C)  A liquidated debt is involved, and there is neither a satisfaction nor an accord. 
D)  An unliquidated debt is involved, and there is an accord and satisfaction. 
E)  An unliquidated debt is involved, and there is an accord but not satisfaction.

Exam 15: Consideration

Carrie promises Tim she will clean his house and in exchange, Tim promises to pay Carrie $50. This is an example of what type of contract?

Partial payment of a debt is never valid consideration.

When are promises based on past consideration enforceable?

Loren and Izra's contract is in dispute. Loren makes an offer to accept less money than the parties agreed on and Izra pays the new amount. Loren and Izra have completed a(n) ________.

________ is what a person receives in return for performing a contract obligation.

Tyler and Laura are arguing over the key difference between a bilateral and a unilateral contract. The key difference in these two types of contracts is ________.

What can a business do to protect itself from a debtor's attempt to create an accord and satisfaction by sending the creditor a check with "paid in full" written on it?

A promise to do something that you are already obligated to do is ________.

When will the court consider adequacy of consideration?

In a(n) ________, the consideration for each promise is a return promise.

Ronaldo says to Becky "I would like to make you my full-time business law tutor." Becky responds that she will think about it and let him know after she talks to Barry who also asked her to be a business law tutor. This is an example of:

Past consideration generally qualifies as consideration.

If there is no dispute about the fact that money is owed and the amount of money owed in a contract, this is considered a(n) ________ debt.

In a unilateral contract, the consideration for a promise is a[n] ________.

Which of the following is true regarding whether an accepted offer to pay part of a debt is consideration?

Which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt when the debt itself, in its entirety, is in dispute, and the creditor agrees?

An Introduction to Dynamic Business Law

Business Ethics

The Us Legal System

Alternative Dispute Resolution

Constitutional Principles

International and Comparative Law

Crime and the Business Community

Tort Law

Negligence and Strict Liability

Product Liability

Liability of Accountants and Other Professionals

Intellectual Property

Introduction to Contracts

Agreement

Capacity and Legality

Legal Assent

Contracts in Writing

Third-Party Rights to Contracts

Discharge and Remedies

Introduction to Sales and Lease Contracts

Title, Risk of Loss, and Insurable Interest

Performance and Obligations Under Sales and Leases

Remedies for Breach of Sales and Lease Contracts

Warranties

Negotiable Instruments: Negotiability and Transferability

Negotiation, Holder in Due Course, and Defenses

Liability, Defenses, and Discharge

Checks and Electronic Fund Transfers

Secured Transactions

Other Creditors Remedies and Suretyship

Bankruptcy and Reorganization

Agency Formation and Duties

Liability to Third Parties and Termination

Forms of Business Organization

Partnerships: Nature, Formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, Officers, and Shareholders

Corporations: Mergers, Consolidations, Terminations

Corporations: Securities and Investor Protection

Employment and Labor Law

Employment Discrimination

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

The Nature of Property, Personal Property, and Bailments

Real Property

Landlord-Tenant Law

Insurance Law

Wills and Trusts

Filters