Question 1

Risks ordinarily assumed in business constitute consideration for the modification of a contract.

Accepted Answer

A) True 
 B)False  False

Question 2

Fact Pattern 10-1 
Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deal-a mortgage loan secured by Bridey's purchase of a house-was unfair because the consideration for their contract was inadequate.
-Refer to Fact Pattern 10-1. The court is most likely to evaluate the adequacy of consid?era?tion if

Accepted Answer

A)  one of the parties claims that they entered into an unwise contract. 
B)  something exchanged is not of direct economic or financial value. 
C)  the items exchanged are of unequal value. 
D)  there is a large disparity in the amount or value of the consideration exchanged. 
A)  one of the parties claims that they entered into an unwise contract. 
B)  something exchanged is not of direct economic or financial value. 
C)  the items exchanged are of unequal value. 
D)  there is a large disparity in the amount or value of the consideration exchanged. D

Question 3

A covenant not to sue does not always bar further recovery.

Accepted Answer

A) True 
 B)False  True

Question 4

The element of bargained-for exchange distinguishes contracts from gifts.

Accepted Answer

A) True 
 B)False

Question 5

Fact Pattern 10-1 
Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deal-a mortgage loan secured by Bridey's purchase of a house-was unfair because the consideration for their contract was inadequate.
-Refer to Fact Pattern 10-1. If, as Bridey claims, the consideration for this contract is inadequate, it may indicate a lack of

Accepted Answer

A)  market value for Bridey's house. 
B)  voluntary consent to the contract on Bridey's part. 
C)  appraisal by a third party on behalf of Continental. 
D)  standards for the granting of credit on Continental's part. 
A)  market value for Bridey's house. 
B)  voluntary consent to the contract on Bridey's part. 
C)  appraisal by a third party on behalf of Continental. 
D)  standards for the granting of credit on Continental's part.

Question 6

If, during the performance of a contract, extraordinary difficulties arise that were totally unforeseen at the time the contract was formed, a court may allow an exception to the preexisting duty rule.

Accepted Answer

A) True 
 B)False

Question 7

It is illegal for two parties to mutually agree to rescind a valid contract.

Accepted Answer

A) True 
 B)False

Question 8

Apple & Pear Orchards contracts to hire Brigit for one year to tend the fruit in its commercial orchards but reserves the right to cancel the employment on thirty days' notice at any time after Brigit begins work. This promise is

Accepted Answer

A)  enforceable. 
B)  illusory. 
C)  unliquidated. 
D)  unforeseen. 
A)  enforceable. 
B)  illusory. 
C)  unliquidated. 
D)  unforeseen.

Question 9

Fact Pattern 10-2 
Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay.
-Refer to Fact Pattern 10-2. If Teatro offers no reason for the extra $250,000, but says only that it will stop work if it is not paid, the agreement is

Accepted Answer

A)  enforceable as the consideration is past. 
B)  enforceable because of unforeseen difficulties. 
C)  unenforceable as an illusory promise. 
D)  unenforceable due to the preexisting duty rule. 
A)  enforceable as the consideration is past. 
B)  enforceable because of unforeseen difficulties. 
C)  unenforceable as an illusory promise. 
D)  unenforceable due to the preexisting duty rule.

Question 10

Mariah promises to pay her assistant Nadine $10,000 in consideration of the ser?vices she provided over the years. Mariah never pays Nadine. Mariah is

Accepted Answer

A)  liable for payment of the $10,000. 
B)  liable only if Nadine still works for Mariah. 
C)  not liable, because the consideration is in the past. 
D)  not liable, because the consideration was unintentional. 
A)  liable for payment of the $10,000. 
B)  liable only if Nadine still works for Mariah. 
C)  not liable, because the consideration is in the past. 
D)  not liable, because the consideration was unintentional.

Question 11

Inadequate consideration always indicates undue influence.

Accepted Answer

A) True 
 B)False

Question 12

Mobile Minutes Company offers Nate an unlimited number of monthly phone minutes for $4.50 per month. Nate ac?cepts. If a dispute arises, a court would likely

Accepted Answer

A)  enforce the deal after questioning the adequacy of the consideration. 
B)  not question the adequacy of the consideration. 
C)  rewrite the deal after questioning the adequacy of the consideration. 
D)  set aside the deal after questioning the adequacy of the consideration. 
A)  enforce the deal after questioning the adequacy of the consideration. 
B)  not question the adequacy of the consideration. 
C)  rewrite the deal after questioning the adequacy of the consideration. 
D)  set aside the deal after questioning the adequacy of the consideration.

Question 13

Adequacy of consideration refers to how much consideration is given.

Accepted Answer

A) True 
 B)False

Question 14

Rudy files a suit against Shakes & Shingles, Roofing Contractor, Inc., under the doctrine of prom?issory estoppel. Rudy must show that

Accepted Answer

A)  he justifiably refused to fulfill a promise to Shakes & Shingles. 
B)  he justifiably relied on Shakes & Shingles' promise to his detriment. 
C)  Shakes & Shingles justifiably refused to fulfill a promise to him. 
D)  Shakes & Shingles justifiably relied on his promise to its detriment. 
A)  he justifiably refused to fulfill a promise to Shakes & Shingles. 
B)  he justifiably relied on Shakes & Shingles' promise to his detriment. 
C)  Shakes & Shingles justifiably refused to fulfill a promise to him. 
D)  Shakes & Shingles justifiably relied on his promise to its detriment.

Question 15

A release bars any further recovery beyond the terms stated in the release.

Accepted Answer

A) True 
 B)False

Question 16

Fact Pattern 10-2 
Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay.
-Refer to Fact Pattern 10-2. If Teatro says it is asking for the extra $250,000 because it has encountered extraordinary unforeseen difficulties that will add consid?erable cost to the project, the agreement is

Accepted Answer

A)  enforceable as the consideration is past. 
B)  enforceable because of unforeseen difficulties. 
C)  unenforceable as an illusory promise. 
D)  unenforceable due to the preexisting duty rule. 
A)  enforceable as the consideration is past. 
B)  enforceable because of unforeseen difficulties. 
C)  unenforceable as an illusory promise. 
D)  unenforceable due to the preexisting duty rule.

Question 17

Franzea is injured in an accident caused by Gentry. Gentry agrees to pay Franzea $2,500 if she agrees to release him from further liability. She agrees. If Franzea's damages ultimately exceed $2,500, she can collect

Accepted Answer

A)  the balance from Gentry in a breach-of-contract suit. 
B)  the balance from Gentry in a tort suit. 
C)  the balance from Gentry on the ground of unforeseen difficulties. 
D)  nothing more from Gentry. 
A)  the balance from Gentry in a breach-of-contract suit. 
B)  the balance from Gentry in a tort suit. 
C)  the balance from Gentry on the ground of unforeseen difficulties. 
D)  nothing more from Gentry.

Question 18

Produce Packaging Company promises its employees a 10 percent raise at the end of the year if productivity has increased and management feels the raise is warranted. Produce Packaging must

Accepted Answer

A)  do nothing. 
B)  give the employees a 10 percent raise only at the end of the year. 
C)  give the employees a 10 percent raise only if produc?tivity increases. 
D)  give the employees a 10 percent raise under any circumstances. 
A)  do nothing. 
B)  give the employees a 10 percent raise only at the end of the year. 
C)  give the employees a 10 percent raise only if produc?tivity increases. 
D)  give the employees a 10 percent raise under any circumstances.

Question 19

Sully signs a contract to borrow $200,000 from Riverside Bank to buy a house. In the contract, Sully agrees to pay a certain rate of interest on the amount of borrowed funds at monthly intervals for thirty years. This debt is

Accepted Answer

A)  an illusory promise. 
B)  liquidated. 
C)  past consideration. 
D)  unliquidated. 
A)  an illusory promise. 
B)  liquidated. 
C)  past consideration. 
D)  unliquidated.

Question 20

In contract law, the term consideration refers to the serious thought that underlies a party's intent to enter into a contract.

Accepted Answer

A) True 
 B)False

Exam 10: Consideration

Risks ordinarily assumed in business constitute consideration for the modification of a contract.

A covenant not to sue does not always bar further recovery.

The element of bargained-for exchange distinguishes contracts from gifts.

If, during the performance of a contract, extraordinary difficulties arise that were totally unforeseen at the time the contract was formed, a court may allow an exception to the preexisting duty rule.

It is illegal for two parties to mutually agree to rescind a valid contract.

Apple & Pear Orchards contracts to hire Brigit for one year to tend the fruit in its commercial orchards but reserves the right to cancel the employment on thirty days' notice at any time after Brigit begins work. This promise is

Mariah promises to pay her assistant Nadine $10,000 in consideration of the ser?vices she provided over the years. Mariah never pays Nadine. Mariah is

Inadequate consideration always indicates undue influence.

Mobile Minutes Company offers Nate an unlimited number of monthly phone minutes for $4.50 per month. Nate ac?cepts. If a dispute arises, a court would likely

Adequacy of consideration refers to how much consideration is given.

Rudy files a suit against Shakes & Shingles, Roofing Contractor, Inc., under the doctrine of prom?issory estoppel. Rudy must show that

A release bars any further recovery beyond the terms stated in the release.

Franzea is injured in an accident caused by Gentry. Gentry agrees to pay Franzea $2,500 if she agrees to release him from further liability. She agrees. If Franzea's damages ultimately exceed $2,500, she can collect

Produce Packaging Company promises its employees a 10 percent raise at the end of the year if productivity has increased and management feels the raise is warranted. Produce Packaging must

Sully signs a contract to borrow $200,000 from Riverside Bank to buy a house. In the contract, Sully agrees to pay a certain rate of interest on the amount of borrowed funds at monthly intervals for thirty years. This debt is

In contract law, the term consideration refers to the serious thought that underlies a party's intent to enter into a contract.

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