Question 1

When an accord and satisfaction is at issue, the ______ is the payment, by the debtor, of the reduced amount.

Accepted Answer

A)  Satisfaction 
B)  Accord 
C)  Seal 
D)  Written compromise 
E)  Written acknowledgement 
A)  Satisfaction 
B)  Accord 
C)  Seal 
D)  Written compromise 
E)  Written acknowledgement A

Question 2

A liquidated debt may be the subject of an accord and satisfaction.

Accepted Answer

A) True 
 B)False  False

Question 3

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 A

Question 4

Which of the following is true regarding illusory promises?

Accepted Answer

A)  Illusory promises are not consideration. 
B)  Illusory promises are consideration. 
C)  Illusory promises qualify as consideration only when past consideration is at issue. 
D)  Illusory promises qualify as consideration only when promissory estoppel is at issue. 
E)  Illusory promises are consideration only when a sale of goods is involved. 
A)  Illusory promises are not consideration. 
B)  Illusory promises are consideration. 
C)  Illusory promises qualify as consideration only when past consideration is at issue. 
D)  Illusory promises qualify as consideration only when promissory estoppel is at issue. 
E)  Illusory promises are consideration only when a sale of goods is involved.

Question 5

In some cases, if past consideration was given with expectation of future payment, the court may enforce the promise.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following occurs when three conditions are met: one party makes a promise knowing the other party will rely on it; the other party does rely on it; the only way to avoid injustice is to enforce the promise?

Accepted Answer

A)  Promissory agreement 
B)  Promissory estoppel 
C)  Quasi estoppel 
D)  Quasi agreement 
E)  Promissory performance 
A)  Promissory agreement 
B)  Promissory estoppel 
C)  Quasi estoppel 
D)  Quasi agreement 
E)  Promissory performance

Question 7

Partial payment of a debt may or may not be valid consideration, depending on whether the debt is liquidated or unliquidated.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Frank is building a home for Debby that is to be completed by December 31st. Frank tells Debby that he needs to hire additional workers in order to have the home done by that time and that she needs to pay him an extra $10,000. Debby says that she will pay. Frank finishes the home and asks for his $10,000. Debby refuses to pay. What is the likely result if Frank sues? Discuss whether you believe the result is ethical and equitable.

Accepted Answer

Debby will likely win. Assuming the unfo

Question 10

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 Sally's hair look 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 Sally's hair look as good as possible. 
E)  Sally will win because there was no valid consideration in exchange for the highlighting.

Question 11

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 12

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.

Question 13

Sue is three months behind on her mortgage, and her lender filed negative information affecting her credit rating. Sue mailed one monthly payment to the lender along with a letter providing that she was making the payment on condition that the lender removes negative material sent to credit reporting agencies affecting her credit rating. The lender cashed the check but did not remove the negative information. Sue sues the bank for breach of contract. Which of the following is the most likely result?

Accepted Answer

A)  The bank will win because under the preexisting duty rule, Sue was already legally obligated to make the payment, and there was no consideration to support the contract. 
B)  The bank will win because under federal law, once correct negative information is reported regarding a customer, it can be removed only if it is found to be untruthful. 
C)  The bank will win because under state law, once correct negative information is reported regarding a customer, it can be removed only if it is found to be untruthful. 
D)  Sue will win because the bank's cashing the check constituted acceptance of her offer, and a valid contract existed. 
E)  Sue will win because the bank had an obligation to notify her that it was not accepting her offer before cashing the check. 
A)  The bank will win because under the preexisting duty rule, Sue was already legally obligated to make the payment, and there was no consideration to support the contract. 
B)  The bank will win because under federal law, once correct negative information is reported regarding a customer, it can be removed only if it is found to be untruthful. 
C)  The bank will win because under state law, once correct negative information is reported regarding a customer, it can be removed only if it is found to be untruthful. 
D)  Sue will win because the bank's cashing the check constituted acceptance of her offer, and a valid contract existed. 
E)  Sue will win because the bank had an obligation to notify her that it was not accepting her offer before cashing the check.

Question 14

Which of the following was the result in the case in the text Hamer v. Sidway, in which, after performance by his nephew, an uncle reneged on a promise to the nephew to pay him $5,000 if the nephew refrained from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he was 21 years of age?

Accepted Answer

A)  That because refraining from the conduct at issue benefited his character and health, the nephew could not recover. 
B)  That no consideration was involved, and the nephew could not recover because the consideration from him did not consist of money or goods. 
C)  That no consideration was involved, and the nephew could not recover because the proof established that the nephew had no interest in engaging in the items at issue, and avoiding them was no detriment to him. 
D)  That the nephew could recover because he supplied consideration. 
E)  That the nephew could recover, but only under promissory estoppel an amount compensating him for his reliance on the promise. 
A)  That because refraining from the conduct at issue benefited his character and health, the nephew could not recover. 
B)  That no consideration was involved, and the nephew could not recover because the consideration from him did not consist of money or goods. 
C)  That no consideration was involved, and the nephew could not recover because the proof established that the nephew had no interest in engaging in the items at issue, and avoiding them was no detriment to him. 
D)  That the nephew could recover because he supplied consideration. 
E)  That the nephew could recover, but only under promissory estoppel an amount compensating him for his reliance on the promise.

Question 15

Sam promises his uncle, Bob, that he will lose 10 pounds and exercise every day during the spring semester in exchange for having his tuition paid for the fall semester. The uncle agrees; but after Sam has lost 10 pounds and exercised all semester, Bob refuses to pay saying that no contract existed. Which of the following is true?

Accepted Answer

A)  Consideration was present, there was an enforceable contract, and Bob has wrongfully refused to pay. 
B)  There was no consideration present, and Bob has no obligation to pay. 
C)  There was no consideration present, but Bob must pay under principles of promissory estoppels. 
D)  There was consideration present, but Bob is not required to pay because the contract was illusory. 
E)  There was consideration present, but Bob is not required to pay because Bob did not receive a benefit personally. 
A)  Consideration was present, there was an enforceable contract, and Bob has wrongfully refused to pay. 
B)  There was no consideration present, and Bob has no obligation to pay. 
C)  There was no consideration present, but Bob must pay under principles of promissory estoppels. 
D)  There was consideration present, but Bob is not required to pay because the contract was illusory. 
E)  There was consideration present, but Bob is not required to pay because Bob did not receive a benefit personally.

Question 16

Christen graduates from college, receives a job offer across the country, and moves there giving up her apartment and cancelling all the other job interviews. After she gets there, she is told that there is no job. What may she recover in most states?

Accepted Answer

A)  Nothing 
B)  Reliance damages 
C)  Liquidated damages 
D)  Acknowledged damages 
E)  Approved damages 
A)  Nothing 
B)  Reliance damages 
C)  Liquidated damages 
D)  Acknowledged damages 
E)  Approved damages

Question 17

"Trick or Treat?" Penny has significant credit card debt following her diving trip with her boyfriend, Sam, to the Grand Cayman islands. Some of the diving trips cost more than she expected, and these extra expenses were unforeseen. Penny recently took a business law class and thought that she might be able to find a way out of her troubles. She owed $2,000 to Credit Card Company A and $3,000 to Credit Card Company B. She also owed $2,000 to the local dive shop for diving equipment she purchased for the trip. Penny is in negotiations with the dive shop over that amount because she had a problem with a mask fogging on the trip and had to replace it while on the trip at a charge of $100. While the mask issue did not significantly interfere with the trip, Penny thought that she should get at least some deduction on the overall bill. Penny called Credit Card Company A and told them that she was a poor student and could not afford to pay the entire $3,000 she owed. The representative of Credit Card Company A, who was working her last day, told Penny just to pay $50, and that would be considered payment in full. The representative sent Penny an e-mail to that effect. Penny was very pleased and went right out and quit her job at the campus bookstore because she did not really like dealing with student problems and thought that with the reduction from Credit Card Company A, she would have no problem in regard to having extra money. Although her parents supplied her with a large monthly allowance, Penny had the job at the bookstore so that she would have more money for clothes shopping and fun activities. In relation to Credit Card Company B, Penny called up and once again pled her case as a poor student. She talked Credit Card Company B into taking a used car with a blown-up engine worth around $1,000 in exchange for the debt. Penny did not lie about the value of the car, but she made it sound as good as possible. Transfer details regarding the car were worked out through e-mail. Finally, Penny sent the dive shop a check for $1,000 marked "paid in full." Much to her surprise and pleasure, the dive shop did indeed cash the check. Penny, however, was distraught to find that within 30 days, Credit Card Company A sent her a bill for $1,950; Credit Card Company B sent her a bill for $3,000; and from the dive shop she received a check for $1,000 along with a bill for $2,000. Faced with all these claims, Penny decided to look for work. She ended up two weeks later with a job selling beauty products that she liked much better than the bookstore job. It did not require dealing with pesky students. Assume all credit card company representatives had authority to make the agreements at issue.

-Define and discuss promissory estoppel, and give an example of when it would be applied.

Accepted Answer

Promissory estoppel occurs when one part

Question 18

Which of the following is what a person will receive in return for performing a contract obligation?

Accepted Answer

A)  Consideration 
B)  Acknowledgement 
C)  Approval 
D)  Accord 
E)  Accession 
A)  Consideration 
B)  Acknowledgement 
C)  Approval 
D)  Accord 
E)  Accession

Question 19

Which of the following is true regarding the effect of a debtor offering to pay a different type of payment, for example, goods instead of money, on a debt for which there is not a dispute over the amount or existence of the debt, 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 not a satisfaction or 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 not a satisfaction or 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.

Question 20

A promise to do something that you are already obligated to do is generally a valid consideration.

Accepted Answer

A) True 
 B)False

Exam 15: Consideration

When an accord and satisfaction is at issue, the ______ is the payment, by the debtor, of the reduced amount.

A liquidated debt may be the subject of an accord and satisfaction.

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

Which of the following is true regarding illusory promises?

In some cases, if past consideration was given with expectation of future payment, the court may enforce the promise.

Which of the following occurs when three conditions are met: one party makes a promise knowing the other party will rely on it; the other party does rely on it; the only way to avoid injustice is to enforce the promise?

Partial payment of a debt may or may not be valid consideration, depending on whether the debt is liquidated or unliquidated.

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 under the UCC regarding checks marked "paid-in-full"?

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?

Christen graduates from college, receives a job offer across the country, and moves there giving up her apartment and cancelling all the other job interviews. After she gets there, she is told that there is no job. What may she recover in most states?

Which of the following is what a person will receive in return for performing a contract obligation?

Which of the following is true regarding the effect of a debtor offering to pay a different type of payment, for example, goods instead of money, on a debt for which there is not a dispute over the amount or existence of the debt, and the creditor agrees?

A promise to do something that you are already obligated to do is generally a valid consideration.

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

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