Deck 12: Consideration

Question 1

Shockingly inadequate consideration can indicate fraud in a contract.

Answer 1

True

Question 2

Situations in which agreements lack consideration include those involving a preexisting duty.

Answer 2

True

Question 3

In general, courts question the adequacy of consideration.

Answer 3

False

Question 4

Normally, a court will evaluate the adequacy of consideration based solely on the comparative value of the things exchanged as part of agreement.

Question 5

Parties are not usually free to bargain as they wish.

Question 6

The elements of consideration, in a bilateral contract for a sale of goods, are the sale and the goods.

Question 7

A preexisting duty may arise out of a previous contract.

Question 8

A preexisting duty may be imposed by law.

Question 9

Consideration refers to the serious thought that underlies a party's intent to enter into a contract.

Question 10

Legal sufficiency of consideration is distinct from adequacy of consideration.

Question 11

To be legally sufficient, consideration must be something of value in the eyes of the law.

Question 12

Providing accounting services is "something of legally sufficient value."

Question 13

Essentially, adequacy of consideration concerns the fairness of the bargain.

Question 14

With respect to consideration, a bargained-for exchange distinguishes a contract from a gift.

Question 15

Consideration is the value given in return for a promise or in return or a performance.

Question 16

To enforce a contractual promise, there must be an exchange of consideration underlying the bargain.

Question 17

Painting a garage can constitute "something of legally sufficient value."

Question 18

Adequacy of consideration refers to "how much" consideration is given.

Question 19

Consideration refers to the time that a party takes to evaluate a deal.

Question 20

To pay on receipt of certain goods is "something of legally sufficient value."

Question 21

Exceptions to the preexisting duty rule include unforeseen difficulties.

Question 22

A promise made in return for an act or event that has already taken place is fully enforceable.

Question 23

An accord and satisfaction is an agreement in which one party gives up the right to pursue a legal claim against another party.

Question 24

A release enables recovery beyond that specified in its terms.

Question 25

Kim promises to pay Leo $500 to install a sump pump in Kim's warehouse. Leo completes the installation. The act of installing the pump

A) imposes a moral obligation on Kim to pay Leo.
B) imposes no obligation on Kim unless she is satisfied with the job.
C) is not sufficient consideration because it is not goods or money.
D) is the consideration that creates Kim's obligation to pay Leo.

Question 26

Two parties can mutually agree to rescind a contract only to the extent that it has been executed-otherwise, there is nothing to rescind.

Question 27

If a party is already bound by contract to perform a certain duty, that duty can serve as consideration for a second contract.

Question 28

Forfeiting a right to sue to recover further damages can constitute consideration.

Question 29

If a person expresses contract terms with such uncertainty that the terms are not definite, the promise is illusory but the deal is enforceable.

Question 30

When the doctrine of promissory estoppel is applied, the promisor is estopped, or barred, from performing the promise.

Question 31

For the doctrine of promissory estoppel to be applied, there must be no clear or definite promise.

Question 32

For an accord and satisfaction to occur, the amount of a debt must be in dispute.

Question 33

Promissory estoppel requires that justice will be better served by the enforcement of the promise.

Question 34

Exceptions to the preexisting duty rule include rescission.

Question 35

To constitute consideration, there must be

A) a payment.
B) a performance.
C) a bargained-for exchange.
D) serious thought underlying each party's intent to contract.

Question 36

Allen promises to pay Barb, his niece, $5,000 if she obtains her degree at City University, where she is in her third year. Barb graduates. Allen must pay Barb because

A) Barb was already at City.
B) obtaining a degree benefits Barb.
C) a job can be hard to find after college.
D) Barb obtained a degree at City.

Question 37

An illusory promise is a promise that is enforceable without consideration.

Question 38

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

Question 39

Ann's Sandwich Shop and Bob's Coffee Bar are adjacent businesses. Ann, whose small shop has little room for her customers to sit, offers Bob a discount on purchases if he will allow her customers to sit at the tables on the sidewalk in front of his store. Bob's forbearance from asking Ann's customers not to use his tables is legally sufficient consideration

A) because Bob has a legal right to restrict the use of his tables.
B) because Ann's customers will undoubtedly use Bob's tables.
C) because Ann's small shop has little room for her customers to sit.
D) under no circumstances.

Question 40

Sports Bar and Tasty Bakery are adjacent businesses with adjoining parking lots. Sports Bar offers Tasty a discount on purchases if the bakery will not tow the cars of Sports Bar's patrons who park in the bakery's lot. The discount is legally sufficient consideration

A) because it is a promise of something of value.
B) because on acceptance, it will become a preexisting duty.
C) because the offeror considers it to be adequate.
D) under no circumstances.

Question 41

Frank offers to buy a guitar owned by Holly for twice what she paid for it. She accepts and hands the guitar to Frank. Holly's delivery of the guitar is

A) not consideration because its adequacy is unfair.
B) not consideration because the exchange is not a bargain.
C) consideration.
D) not consideration because the value is not legally sufficient.

Question 42

Sam offers Tiffany $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely

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

Question 43

National Trucking Company begins transporting crude for Oil Inc. under a contract for a stated amount per load. After six months, National demands an increase in the stated amount because ordinary business expenses have increased. Oil's agreement to pay the increased amount is

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

Question 44

Maria is the sheriff of Narez, Texas. Oscar robs a Narez gas station and a $500 reward is offered for his capture. When, later, Maria finds and arrests him, with respect to the reward, she can

A) collect it.
B) not collect it because she had a preexisting duty to capture Oscar.
C) not collect it because it is not legally sufficient consideration.
D) not collect it because it is an illusory promise.

Question 45

Sean promises to pay his personal assistant Terry $50,000 in consideration of the services she provided over the years. Sean never makes the payment. Sean's promise is

A) enforceable for the entire $50,000.
B) enforceable to the extent of what Terry's services were actually worth.
C) not enforceable because the consideration is in the past.
D) not enforceable because the failure to pay is an unforeseen difficulty.

Question 46

Adequacy of consideration refers to

A) "how much" consideration is given.
B) legally sufficient value in the eyes of the law.
C) the intangible value to a contracting party of a thing exchanged.
D) the substantiality of the consideration exchanged.

Question 47

Jen promises to pay Kay $500 because "she does not have as much money as other people." Jen's promise is

A) enforceable because society wants people to keep their promises.
B) enforceable because the redistribution of wealth is a valid social goal.
C) not enforceable because Jen could have paid Kyle more.
D) not enforceable because Kay has not given consideration in return.

Question 48

Onsite Restoration Inc. begins renovating houses for Property Company under a contract for a stated amount per house. After six months, Onsite demands an extra $20,000 per house, stating no reason for the extra $20,000, but asserting that it will stop work if it is not paid. The agreement is

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

Question 49

Kris buys Liz's house for $300,000, which is the fair market value of the house. If the contract is later disputed in court, the court is likely to declare Kris's consideration

A) inadequate.
B) past.
C) legally sufficient.
D) illusory.

Question 50

Raj defends against a breach-of-contract suit by Student Loan Corporation by claiming that their deal-a student loan-was unfair because the consideration for the contract was inadequate. With respect to Raj's defense, the court will most likely rule in favor of the lender on the ground that Raj

A) promised to do something that he had no prior legal duty to do.
B) performed an act that he was not otherwise obligated to undertake.
C) refrained from an act that he had a legal right to undertake.
D) none of the choices.

Question 51

EcoEnergy LLC files a suit against Fiber Optics Inc., claiming that the consideration for their contract is inadequate-that the plaintiff will not realize sufficient financial benefit from the deal to make it worthwhile. Most likely, the court will

A) evaluate the fairness of the bargain.
B) ask "how much" consideration was given.
C) not question the adequacy of consideration.
D) not determine whether consideration was exchanged.

Question 52

Bistro Caterers contracts with Corporate Towers to cater the firm's business meetings. Later, the contract between Bistro and Corporate is completely rescinded. Even later, Bistro offers to make a new deal. Corporate is willing to deal, but for a new price. Bistro and Corporate

A) may agree to a new contract, but it cannot include a new price.
B) may agree to a new contract that includes the new price.
C) must perform their original contract.
D) must perform the part of their original contract that is executory.

Question 53

A fire threatens to engulf a commercial building in Metro City. The building's owner promises a cash reward to the Metro Fire Department to extinguish the fire. The firefighters cannot claim the reward because

A) extinguishing the fire is the firefighters' preexisting duty.
B) extinguishing the fire represents past consideration.
C) extinguishing the fire is a foreseen difficulty.
D) the promise of a cash reward is illusory.

Question 54

Cindy, a real estate agent, sells her friend Doug's house without charging a commission. In return, Doug promises to give Cindy $1,000. This promise is not an enforceable contract because

A) the house has already been sold-the consideration is past.
B) selling the house was the agent's preexisting duty.
C) selling the house was a foreseen difficulty.
D) the promise of a payment of $1,000 is illusory.

Question 55

Apps Inc. promises to give stock options to Belden, a creative coder, for processes he has already designed. This promise is

A) enforceable because it is a new contract.
B) enforceable because it is an illusory promise.
C) enforceable because it is supported by past consideration.
D) unenforceable.

Question 56

Rex contracts with Spicy Pizza to deliver its products. After the deal has been partially performed, both parties inform each other that they would like to cancel the contract. Rex and Spicy may rescind

A) their entire contract.
B) their contract to the extent that it is executory.
C) none of their contract.
D) their contract to the extent that it has been executed.

Question 57

Excavation Inc. begins digging a foundation for Financial Investment Company under a contract for a certain price. After six months, Excavation demands a higher price because of extraordinary difficulties that were totally unforeseen at the time the contract was formed. An agreement to pay the higher price is

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

Question 58

Rory questions whether there is consideration for his contract with Silver Spurs Club to exchange his performance of country music on certain dates for Silver's payment of a certain amount. To constitute consideration, the value of whatever is exchanged must be

A) objectively worthy.
B) precisely adequate.
C) legally sufficient.
D) practically sound.

Question 59

Expo Center Inc. and Festival Music LLC have an executory contract. They agree to rescind it and simultaneously enter into a new contract. If the previous contract was subject to a preexisting duty, the new contract will most likely be

A) invalid.
B) enforceable.
C) valid.
D) voidable.

Question 60

Under a contract with Soybean Farms, Tai begins grading a terraced hillside for planting. Halfway through the project, Tai asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." The farm agrees but later refuses to pay. The agreement to pay more is

A) unenforceable because Tai's performance was a preexisting duty.
B) unenforceable because the farm's promise was illusory.
C) enforceable.
D) unenforceable because Tai's request modified the contract.

Question 61

While sailboarding, Jolie is injured when Kirby carelessly crosses her path. Kirby's insurance company offers Jolie $50,000 to release Kirby from liability, and she accepts. Later, she learns that her injuries are more serious than she realized. The release is

A) enforceable.
B) unenforceable because Jolie's injuries are unforeseeably difficult.
C) unenforceable because Kirby has a preexisting duty to pay.
D) unenforceable because the release is an illusory promise.

Question 62

Dean, the president of Billing & Credit Company, promises to pay his employee Ewing, who is dangerously obese, $10 for every pound that he loses within the next two years. Ewing agrees, diets and exercises, loses 154 pounds, and asks Dean for $1,540. Dean refuses to pay, saying that he does not remember the promise, but that even if he did make it, there was no consideration, and Ewing's improved health is a sufficient benefit for his effort and sacrifice. Ewing files a suit against Dean. In whose favor is the court likely to rule, and why?

Question 63

Centre City Properties, Inc., owns and manages a warehouse. DIY Home Improvement Stores agrees to lease the warehouse for six years. Under the lease, DIY is obligated to pay all of the utility costs. Two years into the term, DIY asks Centre City to modify the lease to provide that the utility costs will be split equally between them. The landlord agrees, but later decides it does not want to share the costs and refuses to pay. Is Centre City bound to its agreement to share the utility costs? Why or why not?

Question 64

Ethan is indebted to Finance Credit Corporation for $100,000. Ethan agrees to pay, and Finance Credit agrees to accept, a lesser amount than the creditor originally claimed was owed. This agreement is

A) an accord.
B) a release.
C) a satisfaction.
D) an illusory promise.

Question 65

Don slips and falls on a patch of ice on Ella's property. Ella offers Don $10,000 if he promises not to pursue any slip-and-fall legal claim against her. Don agrees, but later discovers that it will cost $40,000 in medical expenses for a latent injury. In Don's suit against Ella, Don will most likely recover

A) $30,000 to pay the costs over what Ella already paid Don.
B) nothing.
C) the estimated amount to pay the costs and any other liability.
D) the exact amount to pay the costs and no more.

Question 66

Dale's Uncle Ed tells Dale, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." Ed's promise is

A) illusory.
B) enforceable.
C) a forbearance.
D) a preexisting duty.

Question 67

Molly's motorcycle is damaged in an accident caused by Luc's negligence. Luc agrees to pay Molly $25,000 if she agrees to release him from further liability. Molly agrees. If Molly's damages ultimately exceed $25,000, she can

A) recover the balance for lack of consideration.
B) recover the balance because the consideration was past.
C) recover the balance due to unforeseen events.
D) not recover the balance.

Question 68

Greta files a suit against Home Repair Corporation under the doctrine of promissory estoppel. Greta must show that

A) she justifiably refused to fulfill a promise to Home Repair.
B) she justifiably relied on Home Repair's promise.
C) Home Repair justifiably refused to fulfill a promise to Greta.
D) Home Repair justifiably relied on Greta's promise.

Question 69

Gwen is indebted to Home Loan Company for $75,000. Gwen agrees to pay, and Home Loan agrees to accept, a lesser amount than the lender originally claimed was owed. The performance of this agreement is

A) an accord.
B) a release.
C) a satisfaction.
D) an illusory promise.

Question 70

Brick and Candy are in an auto accident. Brick offers Candy $20,000 if she promises not to pursue any legal claim against Brick arising out of the accident. Candy agrees. This agreement is

A) past consideration.
B) an illusory promise.
C) a release.
D) promissory estoppel.

Question 71

Marketing Solutions Inc. promises to employ Niki as a software engineer. In reliance on the promise, Niki quits her job with Online Ad Agency, but Marketing Solutions does not hire her. Most likely, Marketing Solutions is

A) liable to Niki under the concept of rescission.
B) liable to Niki under the doctrine of promissory estoppel.
C) liable to Niki under the preexisting duty rule.
D) not liable to Niki.

Question 72

Cloud Storage Inc. promises to pay its employees a year-end bonus "if profits continue to be high and management agrees at the time." This is

A) an enforceable contract.
B) an illusory promise.
C) accord and satisfaction.
D) past consideration.