Question 1

Which of the following is true regarding the adequacy of consideration?

Accepted Answer

A)  Courts generally consider the adequacy of consideration in determining whether to enforce a contract. 
B)  Courts consider the adequacy of consideration only if something is sold for less than 90% of its market value. 
C)  Courts consider the adequacy of consideration only if something is sold for less than 80% of its market value. 
D)  Courts consider the adequacy of consideration only if something is sold for less than 70% of its market value. 
E)  Courts seldom consider the adequacy of consideration but will do so if an item was sold for a low sum in order to avoid claims of creditors. 
A)  Courts generally consider the adequacy of consideration in determining whether to enforce a contract. 
B)  Courts consider the adequacy of consideration only if something is sold for less than 90% of its market value. 
C)  Courts consider the adequacy of consideration only if something is sold for less than 80% of its market value. 
D)  Courts consider the adequacy of consideration only if something is sold for less than 70% of its market value. 
E)  Courts seldom consider the adequacy of consideration but will do so if an item was sold for a low sum in order to avoid claims of creditors. E

Question 2

Consideration is optional in every contract.

Accepted Answer

A) True 
 B)False  False

Question 3

Henry's boss, Jacob, tells him that because he has been such a valuable employee, he will receive an extra week of vacation. When Henry decides to schedule the vacation, he reminds Jacob of his statement. Jacob says that he has changed his mind and that he really cannot afford to let Henry off. Henry says that Jacob has breached the contract he had with Jacob for an extra vacation week. Who is right and why?

Accepted Answer

Jacob is not required to allow Henry to take an extra week off. The reason is that Henry's past work is considered past consideration which is not valid consideration for a binding contract.

Question 4

Reference - Garage sale. Richard, who is cleaning out his garage, offers to sell Dawn a used computer for $200. Dawn replies that "I'll think about it and buy it if I decide to do so." Richard also calls Denise and offers to give Denise a used business law book. She is excited to receive the book and tells him that she will pick it up the next day. Richard also agrees to sell a communications book for $50 to Jill who promises to pick it up the next day. Meanwhile, Sam comes to visit, offers Richard $20 for the business law book and Richard sells it to him. Sam also offers Richard $50 for the used computer. Richard sells it to Sam because he does not expect to hear from Dawn. Sam sees the communications book and offers Richard $60 for it. Richard decides to forget about Jill and proceeds to sell the book to Sam for $60. Denise is very angry because Richard did not save the book for her and claims that he breached a contract because she had accepted his offer. Jill is also angry because Richard sold the communications book and informs him that he breached the contract he had with her. Exactly 31 days later, Dawn tells Richard that she would like the computer. She tells him that her response constituted consideration in that it bound him to an option contract and that he should have awaited her final decision. Richard tells Sam that he needs to return everything for a full refund. Sam refuses. Which of the following is true regarding the dispute between Richard and Sam regarding whether Sam must return anything?

Accepted Answer

A)  Sam must return the computer only. 
B)  Sam must return the business law book only. 
C)  Sam must return the communications book only. 
D)  Sam must return the computer, the business law book, and the communications book. 
E)  Sam does not legally have to return anything. 
A)  Sam must return the computer only. 
B)  Sam must return the business law book only. 
C)  Sam must return the communications book only. 
D)  Sam must return the computer, the business law book, and the communications book. 
E)  Sam does not legally have to return anything.

Question 5

Which of the following are examples of consideration?

Accepted Answer

A)  A benefit to the promisor but not a detriment to the promissee. 
B)  A detriment to the promisee but not a benefit to the promisor. 
C)  A promise to do something, a benefit to the promisor, or a detriment to the promisee. 
D)  An accepted offer. 
E)  A valid counteroffer. 
A)  A benefit to the promisor but not a detriment to the promissee. 
B)  A detriment to the promisee but not a benefit to the promisor. 
C)  A promise to do something, a benefit to the promisor, or a detriment to the promisee. 
D)  An accepted offer. 
E)  A valid counteroffer.

Question 6

Yolanda agrees to bathe and groom Wendy's dog, Fluffy, for $20. Yolanda agreed to the price before seeing Fluffy, a very plump, grouchy Pembroke Welsh Corgi dog with lots of hair. Yolanda tells Wendy that if she is going to groom Fluffy, the price will be $30. Wendy agrees although noting that the dog is named "Fluffy." Yolanda bathes and grooms Fluffy, but Wendy will only pay $20. Which of the following is correct regarding Yolanda's entitlement to the extra $10?

Accepted Answer

A)  Yolanda is entitled to the extra $10 because a valid bilateral contract existed. 
B)  Yolanda is entitled to the extra $10 because a valid unilateral contract existed. 
C)  Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy for $20. 
D)  Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because Wendy's promise to pay $30 was illusory. 
E)  Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because past consideration was involved. 
A)  Yolanda is entitled to the extra $10 because a valid bilateral contract existed. 
B)  Yolanda is entitled to the extra $10 because a valid unilateral contract existed. 
C)  Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy for $20. 
D)  Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because Wendy's promise to pay $30 was illusory. 
E)  Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because past consideration was involved.

Question 7

Which of the following are reasons for disregard of the preexisting-duty rule?

Accepted Answer

A)  Unforeseen circumstances only. 
B)  Additional work only. 
C)  Past consideration only. 
D)  Unforeseen circumstances and additional work, but not past consideration. 
E)  Unforeseen circumstances, additional work, and past consideration. 
A)  Unforeseen circumstances only. 
B)  Additional work only. 
C)  Past consideration only. 
D)  Unforeseen circumstances and additional work, but not past consideration. 
E)  Unforeseen circumstances, additional work, and past consideration.

Question 8

Reference - Marcy's Mom. Marcy's mother, Sue, did not want her to date until she was older. She also wanted Marcy to attend law school. Just before Marcy started her freshman year in college, Sue told Marcy that if Marcy would refrain from dating until she received her law degree, then Sue would pay off all Marcy's school loans and throw in an extra $50,000. Marcy agrees and states, "Thanks, Mom, and by the way, when I graduate I'm throwing you a big party for all you've done for me!" Sue smiles and hugs Marcy. Marcy finished law school and asked for payment of her loans, the $50,000 in cash, and for a car. Sue said "No way - I know you went out on some dates during law school, and I never agreed on the car." Marcy said those were just study nights and that her mother had never objected to Marcy's frequent statements that she wanted a car upon graduation. Sue asks about the party. Marcy tells her that she is nuts because there is no way Marcy can afford a party since Sue has backed out of the deal. After some serious negotiation Marcy and Sue settled their dispute with Sue agreeing to pay for half of Marcy's school loans and for all the expenses of Marcy's upcoming wedding, and to forget about Marcy throwing a party for her. Was the agreement between Marcy and Sue that Sue would pay Marcy's school loans and throw in an extra $50,000 if Marcy refrained from dating until she received a law degree sufficiently supported by consideration?

Accepted Answer

A)  Yes, sufficient consideration existed to support the agreement. 
B)  No, because the agreement was illusory. 
C)  No, because refraining from dating and going to school is not of a monetary value such as to constitute consideration. 
D)  No, because close relatives are involved. 
E)  No, because the consideration was inadequate. 
A)  Yes, sufficient consideration existed to support the agreement. 
B)  No, because the agreement was illusory. 
C)  No, because refraining from dating and going to school is not of a monetary value such as to constitute consideration. 
D)  No, because close relatives are involved. 
E)  No, because the consideration was inadequate.

Question 9

The UCC permits requirement, but not output, contracts for the sale of goods.

Accepted Answer

A) True 
 B)False

Question 10

For a court to enforce a promise, _____________ must offer consideration.

Accepted Answer

A)  Only the offeror. 
B)  Only the offeree. 
C)  Only the acceptee. 
D)  The offeree and acceptor. 
E)  The offeror and offeree. 
A)  Only the offeror. 
B)  Only the offeree. 
C)  Only the acceptee. 
D)  The offeree and acceptor. 
E)  The offeror and offeree.

Question 11

Which of the following is true of a requirements contract under common law?

Accepted Answer

A)  It is valid so long as there is a writing setting forth the terms signed by the offeror. 
B)  It is valid so long as there is a writing setting forth the terms signed by the offeree. 
C)  It is valid so long as there is a writing setting forth the terms signed by the offeror and the offeree. 
D)  It is valid so long as more than nominal consideration is provided. 
E)  It is not valid because of the lack of consideration. 
A)  It is valid so long as there is a writing setting forth the terms signed by the offeror. 
B)  It is valid so long as there is a writing setting forth the terms signed by the offeree. 
C)  It is valid so long as there is a writing setting forth the terms signed by the offeror and the offeree. 
D)  It is valid so long as more than nominal consideration is provided. 
E)  It is not valid because of the lack of consideration.

Question 12

Which of the following is true of a requirement contract under the UCC?

Accepted Answer

A)  It is valid so long as the requirement is made in good faith. 
B)  It is valid so long as there is a writing setting forth the terms signed by the offeree. 
C)  It is valid so long as there is a writing setting forth the terms signed by the offeror and the offeree. 
D)  It is valid so long as more than nominal consideration is provided. 
E)  It is not valid because of the lack of consideration. 
A)  It is valid so long as the requirement is made in good faith. 
B)  It is valid so long as there is a writing setting forth the terms signed by the offeree. 
C)  It is valid so long as there is a writing setting forth the terms signed by the offeror and the offeree. 
D)  It is valid so long as more than nominal consideration is provided. 
E)  It is not valid because of the lack of consideration.

Question 13

Which of the following is true under the UCC regarding checks marked "paid-in-full"?

Accepted Answer

A)  If a business inadvertently cashes such a check, the business has 30 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction. 
B)  If a business inadvertently cashes such a check, the business has 60 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction. 
C)  If a business inadvertently cashes such a check, the business has 90 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction. 
D)  If a business inadvertently cashes such a check, the business has 120 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction. 
E)  The business has no recourse, and the debt is deemed discharged and satisfied. 
A)  If a business inadvertently cashes such a check, the business has 30 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction. 
B)  If a business inadvertently cashes such a check, the business has 60 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction. 
C)  If a business inadvertently cashes such a check, the business has 90 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction. 
D)  If a business inadvertently cashes such a check, the business has 120 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction. 
E)  The business has no recourse, and the debt is deemed discharged and satisfied.

Question 14

Reference - Alien babies. Toymaker Alice came out with a doll that looked like a baby alien. Alice initially had trouble selling the doll to retailers even after offering retailers a contract by which they could buy all the dolls they needed for $10. Slick Eddie, however, who had a retail toy store, signed the agreement whereby he could buy all the dolls he needed for $10. Slick Eddie had a toy store but did very little business because he was so sleazy. Parents wanted to keep kids out. After a few months, the baby alien doll was a surprise hit and every child wanted one. Slick Eddie, however, did not see much demand in his store because, regardless of whether he had alien baby dolls or not, parents disliked him. When demand grew, Alice raised to $40 per doll the price charged to retailers who had not signed a contract to purchase all the dolls they needed for $10. Slick Eddie decided to purchase alien dolls for $10 from Alice and then resell them for $35 to a retailer, Ben, who did not have a contract with Alice to purchase the dolls for $10. His contract with Ben required that he also gift wrap the dolls and that he would provide Ben with all the gift-wrapped dolls he could produce. Eddie then ordered 10,000 alien baby dolls from Alice. When Alice figured out what was happening, sales of alien baby dolls to Slick Eddie were stopped. Will Alice be required to honor Slick Eddie's order for 10,000 alien baby dolls?

Accepted Answer

A)  Yes, because Alice should have known better than to enter into the contract with Slick Eddie. 
B)  Yes, because it did not object to the contract with Slick Eddie within 5 days of the time it was entered into. 
C)  Yes, because it did not object to the contract with Slick Eddie within 10 days of the time it was entered into. 
D)  Yes, because she had a valid contract with Slick Eddie. 
E)  Probably not because it appears that Slick Eddie failed to act in good faith. 
A)  Yes, because Alice should have known better than to enter into the contract with Slick Eddie. 
B)  Yes, because it did not object to the contract with Slick Eddie within 5 days of the time it was entered into. 
C)  Yes, because it did not object to the contract with Slick Eddie within 10 days of the time it was entered into. 
D)  Yes, because she had a valid contract with Slick Eddie. 
E)  Probably not because it appears that Slick Eddie failed to act in good faith.

Question 15

Reference - Garage sale. Richard, who is cleaning out his garage, offers to sell Dawn a used computer for $200. Dawn replies that "I'll think about it and buy it if I decide to do so." Richard also calls Denise and offers to give Denise a used business law book. She is excited to receive the book and tells him that she will pick it up the next day. Richard also agrees to sell a communications book for $50 to Jill who promises to pick it up the next day. Meanwhile, Sam comes to visit, offers Richard $20 for the business law book and Richard sells it to him. Sam also offers Richard $50 for the used computer. Richard sells it to Sam because he does not expect to hear from Dawn. Sam sees the communications book and offers Richard $60 for it. Richard decides to forget about Jill and proceeds to sell the book to Sam for $60. Denise is very angry because Richard did not save the book for her and claims that he breached a contract because she had accepted his offer. Jill is also angry because Richard sold the communications book and informs him that he breached the contract he had with her. Exactly 31 days later, Dawn tells Richard that she would like the computer. She tells him that her response constituted consideration in that it bound him to an option contract and that he should have awaited her final decision. Richard tells Sam that he needs to return everything for a full refund. Sam refuses. Which of the following is true regarding Jill's claim that by selling the communications book for a higher price, Richard breached the contract he had with her?

Accepted Answer

A)  Jill is correct. 
B)  Jill is correct only if she can establish that she had prior dealings with Richard. 
C)  Jill is correct only if she can establish that she had provided past consideration in addition to the amount she agreed to pay for the book. 
D)  Jill is incorrect because her acceptance was illusory. 
E)  Jill is incorrect because the amount she agreed to pay was significantly less than the fair market value of the book and, therefore, did not amount to consideration. 
A)  Jill is correct. 
B)  Jill is correct only if she can establish that she had prior dealings with Richard. 
C)  Jill is correct only if she can establish that she had provided past consideration in addition to the amount she agreed to pay for the book. 
D)  Jill is incorrect because her acceptance was illusory. 
E)  Jill is incorrect because the amount she agreed to pay was significantly less than the fair market value of the book and, therefore, did not amount to consideration.

Question 16

Sally goes to have her hair trimmed and agrees to pay $40 to the stylist. While there, Sally decides that she would also like highlights. The stylist informs her that highlights will cost an additional $30. Sally agrees to the price, gets the highlights, but refuses to pay the extra amount. What is the likely result in a dispute between Sally and the stylist, and why?

Accepted Answer

A)  The stylist will win because she did additional work in exchange for the extra payment and, therefore, Sally's promise was supported by valid consideration. 
B)  The stylist will win because she did additional work in exchange for the extra payment and, therefore, a valid unilateral contract existed. 
C)  The stylist will win unless Sally can show that she had previously received both a trim and highlights for $40. If she can prove that she previously received both for $40, then the past expectations rule applies. 
D)  Sally will win because the stylist had a preexisting duty to have her hair looking as good as possible. 
E)  Sally will win because there was no valid consideration in exchange for the highlighting. 
A)  The stylist will win because she did additional work in exchange for the extra payment and, therefore, Sally's promise was supported by valid consideration. 
B)  The stylist will win because she did additional work in exchange for the extra payment and, therefore, a valid unilateral contract existed. 
C)  The stylist will win unless Sally can show that she had previously received both a trim and highlights for $40. If she can prove that she previously received both for $40, then the past expectations rule applies. 
D)  Sally will win because the stylist had a preexisting duty to have her hair looking as good as possible. 
E)  Sally will win because there was no valid consideration in exchange for the highlighting.

Question 17

Do you believe that the law should be that consideration must be in an amount similar in value to the item or services being transferred in order for the contract to be enforceable? Discuss why or why not.

Accepted Answer

Student responses will vary. It seems un

Question 18

Laura, who has a dress shop, likes a certain style of dress and reaches an agreement with ABC Co., the designer and manufacturer of the dress, that she will purchase all the dresses of that style that ABC Co. can produce for $100 each. Later, ABC Co. learns of Sam, Laura's competitor, who is willing to pay double what Laura agreed to pay for the dresses. ABC Co., attempts to avoid the agreement with Laura on the basis that the agreement with Laura was vague and that consideration was lacking. Which of the following is the most likely result?

Accepted Answer

A)  Laura will win on the basis of promissory estoppels. 
B)  Laura will win because she had a valid output contract. 
C)  Laura will win because she had a valid requirement contract. 
D)  ABC Co. will win because the contract with Laura was insufficiently vague. 
E)  ABC Co. will win so long as Laura was given sufficient notice of its decision to enable her to obtain dresses from some other manufacturer. 
A)  Laura will win on the basis of promissory estoppels. 
B)  Laura will win because she had a valid output contract. 
C)  Laura will win because she had a valid requirement contract. 
D)  ABC Co. will win because the contract with Laura was insufficiently vague. 
E)  ABC Co. will win so long as Laura was given sufficient notice of its decision to enable her to obtain dresses from some other manufacturer.

Question 19

Under Article _____________ of the UCC, an agreement modifying a contract needs no consideration to be binding.

Accepted Answer

A)  One 
B)  Two 
C)  Three 
D)  Five 
E)  None of these. There is no such rule in the UCC. 
A)  One 
B)  Two 
C)  Three 
D)  Five 
E)  None of these. There is no such rule in the UCC.

Question 20

Sam, who has a retail clothing store, orders 50 white shirts from XYZ manufacturer. He later calls a representative of XYZ and requests that blue shirts be sent instead. The representative agrees. Sam gets white shirts and complains. The XYZ representative says that blue shirts are more expensive because they are in greater demand and that there was no consideration for the modification to the contract. Which of the following is the correct resolution of the dispute?

Accepted Answer

A)  Sam is correct because under the UCC no additional consideration was needed. 
B)  Sam is correct because a valid unilateral contract existed. 
C)  The XYZ representative is correct because no additional consideration was provided. 
D)  The XYZ representative is correct because no valid bilateral contract existed. 
E)  The XYZ representative is correct both because no additional consideration was provided and because no valid bilateral contract existed. 
A)  Sam is correct because under the UCC no additional consideration was needed. 
B)  Sam is correct because a valid unilateral contract existed. 
C)  The XYZ representative is correct because no additional consideration was provided. 
D)  The XYZ representative is correct because no valid bilateral contract existed. 
E)  The XYZ representative is correct both because no additional consideration was provided and because no valid bilateral contract existed.

Which of the following is true regarding the adequacy of consideration?

Consideration is optional in every contract.

Which of the following are examples of consideration?

Which of the following are reasons for disregard of the preexisting-duty rule?

The UCC permits requirement, but not output, contracts for the sale of goods.

For a court to enforce a promise, _____________ must offer consideration.

Which of the following is true of a requirements contract under common law?

Which of the following is true of a requirement contract under the UCC?

Which of the following is true under the UCC regarding checks marked "paid-in-full"?

Do you believe that the law should be that consideration must be in an amount similar in value to the item or services being transferred in order for the contract to be enforceable? Discuss why or why not.

Under Article _____________ of the UCC, an agreement modifying a contract needs no consideration to be binding.

An Introduction to the Fundamentals of Dynamic Business Law

Business Ethics and Social Responsibility

The Us Legal System and Alternative Dispute Resolution

Administrative Law

Constitutional Law

Criminal Law and Business

Tort Law

Real, Personal, and Intellectual Property

Consideration

Capacity and Legality

Reality of Assent

Contracts in Writing and Third-Party Contracts

Discharge and Remedies

Formation and Performance of Sales and Lease Contracts

Sales and Lease Contracts: Performance, Warranties, and Remedies

Negotiable Instruments: Negotiability and Transferability

Holder in Due Course, Liability, and Defenses

Secured Transactions and Bankruptcy

Agency and Liability to Third Parties

Forms of Business Organization

Corporations: Formation and Organization

Securities Regulation

Employment and Discrimination Law

Consumer Law

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Exam 9: Introduction to Contracts and Agreement

Which of the following is true regarding the adequacy of consideration?

Consideration is optional in every contract.

Which of the following are examples of consideration?

Which of the following are reasons for disregard of the preexisting-duty rule?

The UCC permits requirement, but not output, contracts for the sale of goods.

For a court to enforce a promise, _____________ must offer consideration.

Which of the following is true of a requirements contract under common law?

Which of the following is true of a requirement contract under the UCC?

Which of the following is true under the UCC regarding checks marked "paid-in-full"?

Do you believe that the law should be that consideration must be in an amount similar in value to the item or services being transferred in order for the contract to be enforceable? Discuss why or why not.

Under Article _____________ of the UCC, an agreement modifying a contract needs no consideration to be binding.

An Introduction to the Fundamentals of Dynamic Business Law

Business Ethics and Social Responsibility

The Us Legal System and Alternative Dispute Resolution

Administrative Law

Constitutional Law

Criminal Law and Business

Tort Law

Real, Personal, and Intellectual Property

Consideration

Capacity and Legality

Reality of Assent

Contracts in Writing and Third-Party Contracts

Discharge and Remedies

Formation and Performance of Sales and Lease Contracts

Sales and Lease Contracts: Performance, Warranties, and Remedies

Negotiable Instruments: Negotiability and Transferability

Holder in Due Course, Liability, and Defenses

Secured Transactions and Bankruptcy

Agency and Liability to Third Parties

Forms of Business Organization

Corporations: Formation and Organization

Securities Regulation

Employment and Discrimination Law

Consumer Law

Filters