Question 1

An illusory promise is valid consideration.

Accepted Answer

A) True 
 B)False  False

Question 2

Pastor Tom was employed by the First Church for 40 years.On Pastor Tom's retirement,there was no adequate pension plan.Two months after the retirement,a wealthy parishioner,in consideration for Pastor Tom's 40 years of faithful service and for being such a "sweet" man,promised to pay him $500 per month for the rest of his life.This promise probably is not enforceable.

Accepted Answer

A) True 
 B)False  True

Question 3

Mid-American Oil had a contract with NSB Company to supply 1,000 gallons of oil by September 1.The contract contained a provision that required all modifications to be written and signed by the company presidents.In early August,an executive of Mid-American talked with the purchasing agent of NSB who orally agreed to two shipments of oil;one in September and the second one in December.By September 30,when only 500 gallons had been delivered,NSB sued.The likely outcome of this lawsuit is:

Accepted Answer

A) NSB wins because the modification was not supported by new consideration. 
B) NSB wins because the modification has to be in writing. 
C) Mid-American Oil wins because the UCC governs this case and no new consideration is required. 
D) Mid-American Oil wins because new consideration was present. 
A) NSB wins because the modification was not supported by new consideration. 
B) NSB wins because the modification has to be in writing. 
C) Mid-American Oil wins because the UCC governs this case and no new consideration is required. 
D) Mid-American Oil wins because new consideration was present. B

Question 4

A liquidated debt is one in which

Accepted Answer

A) the debtor is unable to pay. 
B) there is no dispute about the amount owed. 
C) the parties dispute whether any money is owed. 
D) there is disagreement about the amount owed. 
A) the debtor is unable to pay. 
B) there is no dispute about the amount owed. 
C) the parties dispute whether any money is owed. 
D) there is disagreement about the amount owed.

Question 5

In the historic case of Hamer v.Sidway,the nephew

Accepted Answer

A) lost,as the Court found there was no consideration. 
B) lost,as the uncle was dead. 
C) won,as the Court found there was consideration. 
D) won,as there was a completed gift. 
A) lost,as the Court found there was no consideration. 
B) lost,as the uncle was dead. 
C) won,as the Court found there was consideration. 
D) won,as there was a completed gift.

Question 6

Billy owes a liquidated debt of $3,000 to Rayna,his personal weight trainer.Billy sends Rayna a check for $300 on which he has marked,"Payment in Full." If Rayna cashes the check she will NOT be able to successfully sue Billy for the remainder of the debt.

Accepted Answer

A) True 
 B)False

Question 7

As it pertains to consideration,which of the following constitutes value?

Accepted Answer

A) an illusory promise 
B) a preexisting duty 
C) a forbearance 
D) All of these are correct. 
A) an illusory promise 
B) a preexisting duty 
C) a forbearance 
D) All of these are correct.

Question 8

Shelby hired Evan to drill a well on her property for $3,000.They both thought the soil and subsoil were normal for the area,but after he started drilling,Evan found a layer of rock that required him to purchase a special drill and required an extra ten hours of work.Evan demanded an extra $1,000 to complete the job.Discuss whether Shelby is liable for the additional $1,000.

Accepted Answer

The general rule is that a promise to do

Question 9

Shirley Rhone suffered injuries when a truck struck the vehicle in which she was riding.State Auto Mutual Insurance Co.was the insurer involved and provided personal injury coverage.Shirley went to see Dr.Allen,a chiropractor who provided treatments 32 times over a 3-month period.Dr.Allen billed State Auto in three separate billings.After paying the first two billings in full,State Auto expressed concern about whether Dr.Allen's charges were excessive.State Auto hired Chiropractic Consultants,Inc.to evaluate Dr.Allen's billings.The consultants advised that Dr.Allen's billings were indeed excessive.State Auto then telephoned Dr.Allen and offered a partial payment to settle the account.After this conversation,State Auto issued and sent a check for $864 payable to Dr.Allen.On the face of the check,State Auto noted the total amount allocated to each claim and typed "settlement in full." On the reverse side it said,"The endorsement of this draft by the payee constitutes a clear release and full settlement of the claim or account shown on the other side." Upon receipt of the check,Dr.Allen cashed the check.He then sought payment of an additional $895.State Auto claims there was an accord and satisfaction with respect to the amount due for services rendered by Dr.Allen.What are the requirements of an accord and satisfaction? Were those requirements met in this case?

Accepted Answer

An accord is the agreement to settle for

Question 10

Contracts in which one party agrees in good faith to buy all his requirements of certain goods from the other party are generally unenforceable because there is no definite amount.

Accepted Answer

A) True 
 B)False

Question 11

Mary owes $3,800 on her credit card.She sends the credit card company a check for $800 with the notation "payment in full" on the check.If the credit card issuer cashes the check,

Accepted Answer

A) Mary's balance will automatically be paid in full if the $3,800 amount was a liquidated debt. 
B) Mary's balance will automatically be paid in full regardless of whether the amount of $3,800 was liquidated or unliquidated. 
C) the check may be subject to a UCC exception to the general rules for accord and satisfaction cases involving checks. 
D) Mary's balance will automatically be paid in full if the $3,800 amount was an unliquidated debt. 
A) Mary's balance will automatically be paid in full if the $3,800 amount was a liquidated debt. 
B) Mary's balance will automatically be paid in full regardless of whether the amount of $3,800 was liquidated or unliquidated. 
C) the check may be subject to a UCC exception to the general rules for accord and satisfaction cases involving checks. 
D) Mary's balance will automatically be paid in full if the $3,800 amount was an unliquidated debt.

Question 12

Frank's Furniture Company promised in a written agreement to purchase as much walnut wood "as it desires" from Forestry Products,Inc.If Frank's purchased walnut wood from another source and Forestry Products sued,what is the likely result?

Accepted Answer

Frank's is not obligated to purchase any

Question 13

Agreeing not to open a competing business could be consideration.

Accepted Answer

A) True 
 B)False

Question 14

An agreement between two parties to pay a lesser amount to settle an unliquidated debt is

Accepted Answer

A) enforceable,as there is consideration. 
B) unenforceable,as there is no consideration. 
C) enforceable in only some states. 
D) unenforceable as a violation of public policy. 
A) enforceable,as there is consideration. 
B) unenforceable,as there is no consideration. 
C) enforceable in only some states. 
D) unenforceable as a violation of public policy.

Question 15

A promise by Derkin Restaurants to buy all of the produce it needs this next year at an established price from Elfredo's Produce would be an

Accepted Answer

A) enforceable requirements contract. 
B) enforceable output contract. 
C) unenforceable illusory contract. 
D) unenforceable promise based on past consideration. 
A) enforceable requirements contract. 
B) enforceable output contract. 
C) unenforceable illusory contract. 
D) unenforceable promise based on past consideration.

Question 16

If Becky promises not to drink alcohol until she becomes a legal adult in exchange for Ben's promise of $1,000,the agreement is

Accepted Answer

A) enforceable because Becky is giving up the right to do something she would otherwise be entitled to do. 
B) enforceable because the agreement accomplishes Ben's goal of keeping Becky from drinking. 
C) not enforceable because Becky does not have a legal right to drink alcohol. 
D) not enforceable because Becky is a minor and could disaffirm the contract. 
A) enforceable because Becky is giving up the right to do something she would otherwise be entitled to do. 
B) enforceable because the agreement accomplishes Ben's goal of keeping Becky from drinking. 
C) not enforceable because Becky does not have a legal right to drink alcohol. 
D) not enforceable because Becky is a minor and could disaffirm the contract.

Question 17

Denton agreed to build a cedar deck for the Thrashers for $7,000.After he began the work,the Thrashers asked him to add cedar flower boxes at one side.Denton replied he would,but it would cost an additional $600.The Thrashers would not be obligated to pay the additional sum because the original agreement already obligated Denton to complete the deck for $7,000.

Accepted Answer

A) True 
 B)False

Question 18

The two basic elements of consideration are intention and agreement.

Accepted Answer

A) True 
 B)False

Question 19

An agreement to settle a debt for less than the sum claimed is referred to as

Accepted Answer

A) a promissory estoppel. 
B) an accord. 
C) a satisfaction. 
D) rescission. 
A) a promissory estoppel. 
B) an accord. 
C) a satisfaction. 
D) rescission.

Question 20

The UCC requires consideration for agreements modifying contracts for the sale of goods.

Accepted Answer

A) True 
 B)False

Exam 13: Consideration

An illusory promise is valid consideration.

A liquidated debt is one in which

In the historic case of Hamer v.Sidway,the nephew

Billy owes a liquidated debt of $3,000 to Rayna,his personal weight trainer.Billy sends Rayna a check for $300 on which he has marked,"Payment in Full." If Rayna cashes the check she will NOT be able to successfully sue Billy for the remainder of the debt.

As it pertains to consideration,which of the following constitutes value?

Contracts in which one party agrees in good faith to buy all his requirements of certain goods from the other party are generally unenforceable because there is no definite amount.

Mary owes $3,800 on her credit card.She sends the credit card company a check for $800 with the notation "payment in full" on the check.If the credit card issuer cashes the check,

Frank's Furniture Company promised in a written agreement to purchase as much walnut wood "as it desires" from Forestry Products,Inc.If Frank's purchased walnut wood from another source and Forestry Products sued,what is the likely result?

Agreeing not to open a competing business could be consideration.

An agreement between two parties to pay a lesser amount to settle an unliquidated debt is

A promise by Derkin Restaurants to buy all of the produce it needs this next year at an established price from Elfredo's Produce would be an

If Becky promises not to drink alcohol until she becomes a legal adult in exchange for Ben's promise of $1,000,the agreement is

The two basic elements of consideration are intention and agreement.

An agreement to settle a debt for less than the sum claimed is referred to as

The UCC requires consideration for agreements modifying contracts for the sale of goods.

Introduction to Law

Ethics and Corporate Social Responsibility

International Law

Common Law, Statutory Law, and Administrative Law

Constitutional Law

Dispute Resolution

Crime

Intentional Torts and Business Torts

Negligence, Strict Liability, and Product Liability

Privacy and Internet Law

Introduction to Contracts

Agreement: Offers and Acceptances

Legality

Voidable Contracts: Capacity and Consent

Written Contracts

Third Parties

Contract Termination

Remedies

Practical Contracts

Introduction to Sales

Ownership, Risk and Warranties

Performance and Remedies

Secured Transactions

Creating a Negotiable Instrument

Liability for Negotiable Instruments

Accountants Liability

Agency Law

Employment and Labor Law

Employment Discrimination

Starting a Business: Llcs and Other Options

Partnerships

Life and Death of a Corporation

Management Duties

Shareholder Rights

Bankruptcy

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Planning for the Future: Wills, Trusts and Insurance

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