Question 1

As a general rule, a promise must be supported by consideration. Describe any two exceptions to this rule.

Accepted Answer

Two exceptions to the requirement of consideration are: 1. Voluntary Subscriptions When charitable enterprises are financed by voluntary subscriptions of many people, the promise of each person is generally held to be enforceable. When a number of people make pledges to or subscribe to a charitable association or to a church, for example, the pledges or subscriptions are binding. Despite the fact that such promises lack the technical requirements of ordinary contracts, the courts in most states will enforce the promises as a matter of public policy
2. Promissory Estoppel Although not supported by considerations, courts enforce some promises on the basis of promissory estoppel. According to this doctrine, if one person makes a promise to another, and that other person acts in reliance on the promise, the promisor will not be permitted to claim lack of consideration. Enforcement is held to be proper when the promisor should reasonably expect to cause, and does cause, action by the promisee, and the promisee would be harmed substantially if the promise were not enforced. The theory has gained support as a means of realizing justice.

Question 2

Pledges made by people to charitable associations have no binding power by law.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following is true of the arrangement of composition of creditors?

Accepted Answer

A)  It results in the debtor paying a fine to creditors if he makes the payment after the due date. 
B)  It involves creditors offering an extended time period during which the due payment can be made. 
C)  It occurs when multiple creditors settle in full for a fraction of the amount owed. 
D)  It refers to creditors recovering a 10 percent higher amount than what is due to them. 
A)  It results in the debtor paying a fine to creditors if he makes the payment after the due date. 
B)  It involves creditors offering an extended time period during which the due payment can be made. 
C)  It occurs when multiple creditors settle in full for a fraction of the amount owed. 
D)  It refers to creditors recovering a 10 percent higher amount than what is due to them. C

Question 4

The Uniform Commercial Code states that when a contract for the sale of goods is modified by agreement of the parties, consideration is necessary to make it enforceable.

Accepted Answer

A) True 
 B)False

Question 5

When one refrains or promises to refrain from doing something, this conduct is known as _____.

Accepted Answer

A)  duress 
B)  forbearance 
C)  negligence 
D)  disaffirmation 
A)  duress 
B)  forbearance 
C)  negligence 
D)  disaffirmation

Question 6

Which of the following best describes the term "consideration"?

Accepted Answer

A)  It refers to the record of a case sent for review to a higher court. 
B)  It refers to the promisor refraining from meeting a promise. 
C)  It signifies a promissory note given by the promisor as a token of the transaction. 
D)  It indicates what the promisor demands and receives as the price for a promise. 
A)  It refers to the record of a case sent for review to a higher court. 
B)  It refers to the promisor refraining from meeting a promise. 
C)  It signifies a promissory note given by the promisor as a token of the transaction. 
D)  It indicates what the promisor demands and receives as the price for a promise.

Question 7

Blake has subscribed to a local charitable association where he needs to make a monthly payment of $100. However, a few months later, Blake stops paying this amount. Which of the following exceptions to the requirement of consideration will enforce that Blake pays the amount?

Accepted Answer

A)  Composition of creditors 
B)  Voluntary subscriptions 
C)  Forbearance to cancel monthly subscriptions 
D)  Modification of sales contracts 
A)  Composition of creditors 
B)  Voluntary subscriptions 
C)  Forbearance to cancel monthly subscriptions 
D)  Modification of sales contracts

Question 8

As a general rule, the adequacy of the consideration is irrelevant because the law allows bargains.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is an example of a valid consideration?

Accepted Answer

A)  A promises to sell paint to B when the shipment arrives. 
B)  A promises to pay B if he stops driving above the speed limit. 
C)  A promises to pay B if he refrains from committing theft. 
D)  A promises to paint B's house if B leaves the house for two days. 
A)  A promises to sell paint to B when the shipment arrives. 
B)  A promises to pay B if he stops driving above the speed limit. 
C)  A promises to pay B if he refrains from committing theft. 
D)  A promises to paint B's house if B leaves the house for two days.

Question 10

Consideration distinguishes mere agreements from legally enforceable obligations.

Accepted Answer

A) True 
 B)False

Question 11

For a promise to constitute consideration, the promise must prevent imposing an obligation on the person making it.

Accepted Answer

A) True 
 B)False

Question 12

When a new contract is replaced with an old one, it is mandatory for the added features to be equal for both parties for the contract to be enforceable.

Accepted Answer

A) True 
 B)False

Question 13

Consideration can constitute financial or non-financial items.

Accepted Answer

A) True 
 B)False

Question 14

When charitable enterprises are financed by voluntary subscriptions of many people, the promise of each person is generally not held to be enforceable.

Accepted Answer

A) True 
 B)False

Question 15

Performing or promising to perform what one is already obligated to do is a valid consideration.

Accepted Answer

A) True 
 B)False

Question 16

If the debt is evidenced by a note or other written evidence, cancellation and return of the written evidence cancels the debt.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is true of the doctrine of promissory estoppel?

Accepted Answer

A)  It requires that promises made should be supported by consideration. 
B)  It permits the promisor to claim lack of consideration when the promisee acts in reliance on his promise. 
C)  It requires the promisor to reasonably expect the promise to induce action by the promisee. 
D)  It holds enforcement to be proper if the promisee would not be harmed if the promise were not enforced. 
A)  It requires that promises made should be supported by consideration. 
B)  It permits the promisor to claim lack of consideration when the promisee acts in reliance on his promise. 
C)  It requires the promisor to reasonably expect the promise to induce action by the promisee. 
D)  It holds enforcement to be proper if the promisee would not be harmed if the promise were not enforced.

Question 18

If the supposed consideration consists merely of a promise to do what one is already legally obligated to do, consideration is invalid.

Accepted Answer

A) True 
 B)False

Question 19

Mark owes $2000 each to his business partners, Ryan, Bryan, and Clark. Since Mark is facing financial difficulties, his business partners agree to accept a total amount of $4800 from Mark as a cancellation of the unpaid balance due to them. This type of an agreement is known as a _____.

Accepted Answer

A)  composition of creditors 
B)  writ of certiorari 
C)  forbearance 
D)  promissory estoppel 
A)  composition of creditors 
B)  writ of certiorari 
C)  forbearance 
D)  promissory estoppel

Question 20

As a general rule, a promise must be supported by consideration. Which of the following is an exception to the rule and can be enforced without the support of consideration?

Accepted Answer

A)  A non-charitable enterprise financed by the subscriptions of individuals 
B)  A promise to refrain from doing what one has no right to do 
C)  An act performed prior to the promise made by the promisor 
D)  An obligation of record such as a judgment 
A)  A non-charitable enterprise financed by the subscriptions of individuals 
B)  A promise to refrain from doing what one has no right to do 
C)  An act performed prior to the promise made by the promisor 
D)  An obligation of record such as a judgment

Exam 8: Consideration

As a general rule, a promise must be supported by consideration. Describe any two exceptions to this rule.

Pledges made by people to charitable associations have no binding power by law.

Which of the following is true of the arrangement of composition of creditors?

The Uniform Commercial Code states that when a contract for the sale of goods is modified by agreement of the parties, consideration is necessary to make it enforceable.

When one refrains or promises to refrain from doing something, this conduct is known as _____.

Which of the following best describes the term "consideration"?

Blake has subscribed to a local charitable association where he needs to make a monthly payment of $100. However, a few months later, Blake stops paying this amount. Which of the following exceptions to the requirement of consideration will enforce that Blake pays the amount?

As a general rule, the adequacy of the consideration is irrelevant because the law allows bargains.

Which of the following is an example of a valid consideration?

Consideration distinguishes mere agreements from legally enforceable obligations.

For a promise to constitute consideration, the promise must prevent imposing an obligation on the person making it.

When a new contract is replaced with an old one, it is mandatory for the added features to be equal for both parties for the contract to be enforceable.

Consideration can constitute financial or non-financial items.

When charitable enterprises are financed by voluntary subscriptions of many people, the promise of each person is generally not held to be enforceable.

Performing or promising to perform what one is already obligated to do is a valid consideration.

If the debt is evidenced by a note or other written evidence, cancellation and return of the written evidence cancels the debt.

Which of the following is true of the doctrine of promissory estoppel?

If the supposed consideration consists merely of a promise to do what one is already legally obligated to do, consideration is invalid.

Mark owes $2000 each to his business partners, Ryan, Bryan, and Clark. Since Mark is facing financial difficulties, his business partners agree to accept a total amount of $4800 from Mark as a cancellation of the unpaid balance due to them. This type of an agreement is known as a _____.

As a general rule, a promise must be supported by consideration. Which of the following is an exception to the rule and can be enforced without the support of consideration?

Introduction to Law

Courts and Court Procedure

Business Torts and Crimes

Government Regulation of Business

Nature and Classes of Contracts

Offer and Acceptance

Capacity to Contract

Defective Agreements

Illegal Agreements

Written Contracts

Third Parties and Contracts

Termination of Contracts

Nature of Personal Property

Special Bailments

Sales of Personal Property

Formalities of a Sale

Transfer of Title and Risk in Sales Con

Warranties, Product Liability, and Cons

Nature of Negotiable Instruments

Essentials of Negotiability

Promissory Notes and Drafts

Negotiation and Discharge

Liabilities of Parties and Holders in Due Course

Defenses

Nature and Creation of an Agency

Operation and Termination of an Agency

Employer and Employee Relations

Employees Rights

Labor Legislation

Introduction to Business Organization

Creation and Operation of a Partnership

Dissolution of a Partnership

Nature of a Corporation

Ownership of a Corporation

Management and Dissolution of a Corpora

Principles of Insurance

Types of Insurance

Security Devices

Bankruptcy

Nature of Real Property

Transfer of Real Property

Real Estate Mortgages

Landlord and Tenant

Wills, Inheritances, and Trusts

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