Question 1

Which of the following would not be considered an example of consideration?

Accepted Answer

A)  A promise to be on time for class all semester. 
B)  A promise to stop drinking sports drinks. 
C)  A promise to walk the neighbor's dog. 
D)  A promise to call the police if the neighbor's alarm system should go off while they are on vacation. 
E)  A promise to pay your employees as required by law. 
A)  A promise to be on time for class all semester. 
B)  A promise to stop drinking sports drinks. 
C)  A promise to walk the neighbor's dog. 
D)  A promise to call the police if the neighbor's alarm system should go off while they are on vacation. 
E)  A promise to pay your employees as required by law.

Question 2

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. Assuming injustice cannot be established, who is right and why regarding whether a valid contract for an extra week off existed?

Accepted Answer

Jacob is not required to allow

Question 3

An exception to the rule requiring consideration is promissory estoppel.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is true regarding the rating the World Bank gives China in relation to the ease of doing business there?

Accepted Answer

A)  China is rated in the top 10. 
B)  China is ranked near the middle. 
C)  China is ranked in the bottom 25. 
D)  China is ranked in the bottom 10. 
E)  China is ranked last. 
A)  China is rated in the top 10. 
B)  China is ranked near the middle. 
C)  China is ranked in the bottom 25. 
D)  China is ranked in the bottom 10. 
E)  China is ranked last.

Question 5

Which of the following is an exception to the rule requiring consideration?

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 6

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 fraud is involved. 
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 fraud is involved.

Question 7

Which of the following was the result on appeal in the Case Opener involving the alleged breach of an oral contract based on the plaintiff lawyer loaning a corporate client funds and the client later reneging on a promise, made in gratitude, to give the lawyer 3 percent of the company's stock?

Accepted Answer

A)  That the promise to transfer the stock flowed from the loan transaction and was enforceable by the plaintiff. 
B)  That the promise was unenforceable because lawyers may not loan clients money. 
C)  That the promise was enforceable only if the total the plaintiff received in funds did not violate state usury laws involving maximum interest rates. 
D)  That the promise was not enforceable because it was a gift. 
E)  That the promise was enforceable as a gift. 
A)  That the promise to transfer the stock flowed from the loan transaction and was enforceable by the plaintiff. 
B)  That the promise was unenforceable because lawyers may not loan clients money. 
C)  That the promise was enforceable only if the total the plaintiff received in funds did not violate state usury laws involving maximum interest rates. 
D)  That the promise was not enforceable because it was a gift. 
E)  That the promise was enforceable as a gift.

Question 8

A promise to do something that you are already obligated to do is ____.

Accepted Answer

A)  Valid consideration because it is illusory consideration 
B)  Valid consideration only in the employment context 
C)  Valid consideration because it is past consideration 
D)  Valid consideration only if a sale of goods is involved 
E)  Not valid consideration 
A)  Valid consideration because it is illusory consideration 
B)  Valid consideration only in the employment context 
C)  Valid consideration because it is past consideration 
D)  Valid consideration only if a sale of goods is involved 
E)  Not valid consideration

Question 9

Yolanda agrees to bathe and groom Wendy's dog, Fluffy Puff, for $30. Yolanda agreed to the price before seeing Fluffy Puff who is a chubby dog with lots of hair. Yolanda tells Wendy that if she is going to groom Fluffy Puff, the price will be $40. Wendy reluctantly agrees but tells Yolanda that she should not have been surprised that a dog named Fluffy Puff would have lots of hair. Yolanda bathes and grooms Fluffy Puff, but Wendy will only pay $30. 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 does not apply, Yolanda is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy Puff for $30. 
D)  Assuming the unforeseen circumstances rule does not apply, Yolanda is not entitled to the extra $10 because Wendy's promise to pay $30 was illusory. 
E)  Assuming the unforeseen circumstances rule does not apply, 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 does not apply, Yolanda is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy Puff for $30. 
D)  Assuming the unforeseen circumstances rule does not apply, Yolanda is not entitled to the extra $10 because Wendy's promise to pay $30 was illusory. 
E)  Assuming the unforeseen circumstances rule does not apply, Yolanda is not entitled to the extra $10 because past consideration was involved.

Question 10

"Bank Robbery." Safe Bank was robbed of a significant sum of cash by a robber later identified as Victor Victory. Safe Bank offered a reward of $10,000 to anyone who captured or provided information leading to the capture of Victor. Ted, a police officer in town, promised Safe Bank officials that he would apprehend Victor. While on duty, Ted arrested Victor at a hamburger joint in town. He found Victor based upon a hunch he had after Ursula, who dated Victor, told him about various places Victor enjoyed eating. The bank refuses to pay either Ursula or Ted any of the reward money.
-In a lawsuit between the bank and Ursula, regarding the reward funds, who is likely to prevail and why?

Accepted Answer

A)  The bank is likely to prevail because Ursula only provided past consideration. 
B)  The bank is likely to prevail because Ursula was tainted by being Victor's girlfriend. 
C)  The bank is likely to prevail because no valid bilateral contract existed. 
D)  Ursula is likely to prevail because a valid bilateral contract existed. 
E)  Ursula is likely to prevail because an enforceable unilateral contract exists based on her provision of information leading to the capture of Victor. 
A)  The bank is likely to prevail because Ursula only provided past consideration. 
B)  The bank is likely to prevail because Ursula was tainted by being Victor's girlfriend. 
C)  The bank is likely to prevail because no valid bilateral contract existed. 
D)  Ursula is likely to prevail because a valid bilateral contract existed. 
E)  Ursula is likely to prevail because an enforceable unilateral contract exists based on her provision of information leading to the capture of Victor.

Question 11

Consideration is optional in every contract.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not an example of consideration?

Accepted Answer

A)  A promise to stay in a job until a particular project is complete. 
B)  A promise to your football coach to refrain from riding your motorcycle during football season even though you love riding it. 
C)  A promise to cook dinner for your roommate for the next six months. 
D)  A promise to buy skis for $300 if you like them. 
E)  A promise to stop staying out late at night during exam week. 
A)  A promise to stay in a job until a particular project is complete. 
B)  A promise to your football coach to refrain from riding your motorcycle during football season even though you love riding it. 
C)  A promise to cook dinner for your roommate for the next six months. 
D)  A promise to buy skis for $300 if you like them. 
E)  A promise to stop staying out late at night during exam week.

Question 13

In a bilateral contract, the consideration for each promise is ____.

Accepted Answer

A)  A completed act 
B)  The beginning of action in acceptance, even if it is not complete 
C)  An acknowledgement 
D)  A return promise 
E)  An agreement 
A)  A completed act 
B)  The beginning of action in acceptance, even if it is not complete 
C)  An acknowledgement 
D)  A return promise 
E)  An agreement

Question 14

Tina, an experienced pool contractor, and Bruce agree on a price for Tina to build a pool in Bruce's backyard. Tina discovers that she did not initially figure in enough of a charge for labor. She tells Bruce that unless she receives an extra $5,000 with which to hire workers, she cannot complete the job. Bruce agrees thinking to himself that he has a way out. When Tina finishes the pool, Bruce refuses to pay the additional $5,000. Which of the following is the most likely result of their dispute?

Accepted Answer

A)  Bruce will be required to pay because a typical, unilateral contract is involved, and he got the benefit of his bargain. 
B)  Bruce will be required to pay because a typical, bilateral contract is involved, and he got the benefit of his bargain. 
C)  Bruce will be required to pay because unforeseen circumstances are an exception to the preexisting duty rule. 
D)  Bruce will not be required to pay because he provided no additional consideration, and the preexisting duty rule applies. 
E)  Bruce will only be required to pay ½ of the agreed upon amounts because of the calculations involved under the preexisting duty rule. 
A)  Bruce will be required to pay because a typical, unilateral contract is involved, and he got the benefit of his bargain. 
B)  Bruce will be required to pay because a typical, bilateral contract is involved, and he got the benefit of his bargain. 
C)  Bruce will be required to pay because unforeseen circumstances are an exception to the preexisting duty rule. 
D)  Bruce will not be required to pay because he provided no additional consideration, and the preexisting duty rule applies. 
E)  Bruce will only be required to pay ½ of the agreed upon amounts because of the calculations involved under the preexisting duty rule.

Question 15

Which of the following is true regarding the preexisting duty rule?

Accepted Answer

A)  Unforeseen circumstances is an exception, but additional work and past consideration are not exceptions. 
B)  Additional work is an exception, but unforeseen circumstances and past consideration are not exceptions. 
C)  Past consideration is an exception, but unforeseen circumstances and additional work are not exceptions. 
D)  Unforeseen circumstances and additional work are exceptions, but past consideration is not an exception. 
E)  Unforeseen circumstances and past consideration are exceptions, but additional work is not an exception. 
A)  Unforeseen circumstances is an exception, but additional work and past consideration are not exceptions. 
B)  Additional work is an exception, but unforeseen circumstances and past consideration are not exceptions. 
C)  Past consideration is an exception, but unforeseen circumstances and additional work are not exceptions. 
D)  Unforeseen circumstances and additional work are exceptions, but past consideration is not an exception. 
E)  Unforeseen circumstances and past consideration are exceptions, but additional work is not an exception.

Question 16

An illusory promise is not a consideration.

Accepted Answer

A) True 
 B)False

Question 17

Sam offers Betty his bicycle for $75. Which of the following is an example of an illusory promise on the part of Betty?

Accepted Answer

A)  "I'll take it." 
B)  "I'll take it if I decide to do so." 
C)  "I won't pay $75, but I will pay $50." 
D)  "I'll take it if you will let me try it out first and the brakes work well." 
E)  "I'll take it if you will buy new tires." 
A)  "I'll take it." 
B)  "I'll take it if I decide to do so." 
C)  "I won't pay $75, but I will pay $50." 
D)  "I'll take it if you will let me try it out first and the brakes work well." 
E)  "I'll take it if you will buy new tires."

Question 18

"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.

-What is Credit Card Company A's best argument in relation to enforcing Penny's obligations?

Accepted Answer

A)  That the agreement constituted a bad deal for the card company. 
B)  That only past consideration was involved. 
C)  That student debt is not dischargeable as a matter of law and that the card company owed no obligation to Penny regardless of statements made. 
D)  That its promise was clearly an illusory promise that Penny should have known could not be enforced once the card company discovered the true circumstances. 
E)  That no consideration existed for its promise, and that based on Penny's circumstances and behavior, enforcing the debt would not result in injustice to Penny. 
A)  That the agreement constituted a bad deal for the card company. 
B)  That only past consideration was involved. 
C)  That student debt is not dischargeable as a matter of law and that the card company owed no obligation to Penny regardless of statements made. 
D)  That its promise was clearly an illusory promise that Penny should have known could not be enforced once the card company discovered the true circumstances. 
E)  That no consideration existed for its promise, and that based on Penny's circumstances and behavior, enforcing the debt would not result in injustice to Penny.

Question 19

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

Accepted Answer

A)  The offeror but not the offeree 
B)  The offeree but not the offeror 
C)  The acceptee but not the acceptor 
D)  The acceptor but not the acceptee 
E)  Each side to the contract 
A)  The offeror but not the offeree 
B)  The offeree but not the offeror 
C)  The acceptee but not the acceptor 
D)  The acceptor but not the acceptee 
E)  Each side to the contract

Question 20

In a[n] ______ debt, the parties either dispute the fact that any money is owed or agree that some money is owed but dispute the amount.

Accepted Answer

A)  Disputed 
B)  Unacknowledged 
C)  Uncertain 
D)  Liquidated 
E)  Unliquidated 
A)  Disputed 
B)  Unacknowledged 
C)  Uncertain 
D)  Liquidated 
E)  Unliquidated

Exam 15: Consideration

Which of the following would not be considered an example of consideration?

An exception to the rule requiring consideration is promissory estoppel.

Which of the following is true regarding the rating the World Bank gives China in relation to the ease of doing business there?

Which of the following is an exception to the rule requiring consideration?

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

Which of the following was the result on appeal in the Case Opener involving the alleged breach of an oral contract based on the plaintiff lawyer loaning a corporate client funds and the client later reneging on a promise, made in gratitude, to give the lawyer 3 percent of the company's stock?

A promise to do something that you are already obligated to do is ____.

Consideration is optional in every contract.

Which of the following is not an example of consideration?

In a bilateral contract, the consideration for each promise is ____.

Which of the following is true regarding the preexisting duty rule?

An illusory promise is not a consideration.

Sam offers Betty his bicycle for $75. Which of the following is an example of an illusory promise on the part of Betty?

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

In a[n] ______ debt, the parties either dispute the fact that any money is owed or agree that some money is owed but dispute the amount.

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

Filters