Deck 7: Formation of a Contract: Consideration and Intention

Question 1

When a contract is authenticated by the affixing of a seal,the contract will be enforceable even when it lacks

A)a promissory basis.
B)an acceptance.
C)consideration.
D)contractual intention.
E)an offer.

Answer 1

C

Question 2

A gratuitous promise differs from a contract in that

A)a gratuitous promise cannot lapse.
B)it does not require the payment of money to the offeror by the offeree.
C)consideration flows only in one direction.
D)a gratuitous promise cannot be revoked.
E)the terms of a gratuitous promise are not precise enough to be binding.

Answer 2

C

Question 3

The principle of injurious reliance is

A)the loss or harm that is suffered by a promisee who,to his or her detriment,relies on a gratuitous promise.
B)the contractual relationship that arises between an injured party and the person or persons on whom this injured party relies.
C)the injury that a person in a contractual relationship suffers when there is a breach of contract.
D)the amount of compensation that is awarded to a party where there is a breach of contract.
E)the personal injury that is suffered by persons who are involved in contractual situations.

Answer 3

A

Question 4

When Sav was a teenager,he was involved in a boating accident.After seeing the accident,Philip approached in a second vessel and saved Sav's life.Some years later Sav promised to reward Philip for his life-saving actions.He specifically promised to turn over a valuable coin set that he had acquired over the years.On the day he was to deliver the coin set Sav changed his mind and said that although he was grateful,he was not going to part with the coin set.Philip's court action to enforce the promise will

A)succeed because the promise is binding.
B)fail because the promise is gratuitous and not binding.
C)succeed because the previous benefit constitutes consideration.
D)succeed because consideration will be implied at law.
E)fail because a deposit is required when dealing with past consideration.

Question 5

The contractual requirement of consideration provides that

A)the contract must be given careful consideration before it is entered into.
B)the offeror must pay cash for the offeree's promise to perform an act.
C)an offeree must pay cash for the offeror's promise to perform an act.
D)each party must give something of value in exchange.
E)what is exchanged by the parties must be of equal value.

Question 6

A,at the request of B,enters into a contract to buy a horse from B for a certain price.Just after entering into the contract,B tells A that the horse is sound and healthy.Later A discovers that,in fact,the horse is in ill health.In this situation,B's statement to A that the horse was sound and healthy

A)is partly fresh and past consideration so as to not make B's promise binding.
B)is partly fresh and partly past consideration so as to make B's promise binding.
C)is past consideration so as to not make B's promise binding.
D)is fresh consideration so as to make B's promise binding.
E)all of the above

Question 7

Jack walks into a bar.He is a little tipsy.The waitress pours him a pint of beer and he pays with all the money he has on him.He makes this statement to the waitress: "Sorry I can't tip you today,but you know what,I have this lottery ticket,and if I win,I'll split it with you." The waitress says,"No problem,Jack." Jack later makes a copy of the ticket for the waitress.The next day Jack receives a call from Stephanie,the waitress,who tells him that she checked the numbers and that he has won $1 million.Stephanie asks,"Our deal is on right?" Jack says,"What deal?" She says,"You promised to split the winning ticket with me." He says,"Really?" Which of the following is TRUE?

A)Jack will have to split the proceeds with Stephanie on a quantum meruit basis.
B)Stephanie can sue Jack for breach of contract if she does not get her share of the ticket.
C)Jack promised to split the winning ticket with Stephanie and she accepted,so a valid contract was created.
D)No contract arose because there was no intention on the part of Jack to enter into legal relations with Stephanie.
E)A contract did not arise because Jack's statement was not an offer.

Question 8

James does some work for Jim.Jim refuses to pay on the grounds that not all the work was done.James takes Jim to court and the judge says James is entitled to a quantum meruit.This means that

A)the parties will agree on the appropriate price.
B)a dispute regarding the price should be resolved by arbitration.
C)Jim must pay a reasonable amount for the services rendered.
D)a price will be fixed for the work done.
E)James is entitled to his expenses.

Question 9

The reasonable bystander test is

A)a test that employs witnesses to make candid observations about contract cases.
B)the test that is used by the courts to determine whether parties intended to enter into legal relations with each other.
C)the test that employs non-specialists as members of a jury in contract cases.
D)the test that the parties can use to determine who is in breach of contract.
E)the test that the parties can use to determine compensation in contract cases.

Question 10

A promise by a creditor to accept less than full payment from a debtor is

A)unenforceable because the creditor did not provide consideration.
B)enforceable because the promisee accepts the offer.
C)a bilateral contract.
D)unenforceable because it is a gratuitous promise.
E)enforceable because it gives rise to a contract.

Question 11

Jack and Jill are friends.Jack agrees to mow Jill's lawn and Jill agrees to pay Jack $50.00.Jill wants the lawn mowed by April 1.Jill returns on April 3 and finds that the lawn has not been mowed.Jill,who is entertaining the next day,goes to Jack and promises that if he mows the lawn that day,she will give him an additional $20.00.Jack mows the lawn but Jill refuses to pay him the additional $20.00.Which of the following is TRUE?

A)Jack can sue Jill for breach of contract.
B)Jill has no obligation to pay because the promise to pay the additional $20.00 was not supported by fresh consideration.Jack had a pre-existing legal duty to mow the lawn.
C)There was no offer and acceptance.
D)Jill has an obligation to pay the additional $20.00 because a legally enforceable promise to pay was made.
E)Jill made an offer and Jack accepted it,so a contract was created.

Question 12

The concept of estoppel is where

A)the court stops a party from performing a contract.
B)the terms of the contract require that one of the parties be stopped from performing a particular act.
C)the promisee is stopped from denying the truth of a fact or statement.
D)the court suspends the operation of the contract.
E)the maker of a statement or promise is prevented by the courts from either denying the truth of the statement or going back on a promise.

Question 13

When one person requests the services of another,and the other performs those services,the law

A)requires that the plaintiff prove there was a promise to pay.
B)treats the services as being provided gratuitously.
C)implies a promise to pay.
D)recognizes no implied promise to pay.
E)requires that the service provider pay a specific amount.

Question 14

Which of the following would a court NOT regard as consideration on the part of a party to a contract?

A)a promise to pay for what the other party has already done
B)giving up what the party honestly believes is a right to sue
C)a promise to pay money to the other party in the future
D)a promise to pay money to a third party who is not a party to the contract
E)money paid to the other party

Question 15

Shahid orders a pizza by telephone and says he will pay on delivery.Which of the following would constitute consideration received by Shahid?

A)placing the call
B)promising to pay for the pizza
C)handing over the money
D)accepting delivery of the pizza
E)none of the above

Question 16

Which of the following is NOT true about consideration?

A)Consideration must be of some value in the eyes of the law.
B)A gratuitous promise is not supported by consideration.
C)Consideration has to be adequate.
D)Consideration must be sufficient.
E)Consideration can be in the form of a detriment to a party.

Question 17

Even when offer and acceptance and consideration are present,there may be no enforceable contract if

A)the subject of the contract is too trivial.
B)there were no witnesses present at the signing of the contract.
C)the contract is not in writing.
D)there is no intent to create legal relations.
E)the consideration is not adequate.

Question 18

An intention to create legal relations exists if

A)the promisor and the promisee have identified all the consideration involved in the contract.
B)there is an offer,acceptance,and consideration.
C)a reasonable person would believe that the parties intended to be bound by the contract.
D)the court examines the facts and determines that the parties intended to enter into legal relations.
E)the parties have capacity to enter into a contract.

Question 19

On March 1,Al agrees to sell Barb his house for $250 000.Barb pays a deposit of $15 000,and they agree that title will transfer and the price will be paid on April 30.The agreement is signed by both parties under seal.What is the consideration on Barb's part?

A)the deposit of $15 000
B)there is no consideration
C)quantum meruit
D)the seal
E)the promise to pay the $250 000

Question 20

Consideration is

A)the price that is paid for the promise of another.
B)a special kind of gratuitous promise.
C)the acceptance of an offer.
D)the offer that is made to another.
E)a special kind of acceptance.

Question 21

Where there is an existing contract between two parties and,to ensure performance,one party promises to give more consideration than under the original contract,the new promise is binding and must be performed.

Question 22

Generally speaking,it is up to the court to ensure that a fair bargain was made; that is,to ensure that the consideration for a promise is adequate.

Question 23

Estoppel or promissory estoppel was developed to overcome the principle that payment of a lesser sum in satisfaction of a greater sum is no payment at all.

Question 24

Motive can change a gratuitous promise into a binding contract.

Question 25

A promise made properly under the seal of the promisor does not require consideration to make it binding.

Question 26

What is the effect of sealing a contractual document?

Question 27

A covenant recorded in a document containing a wax seal,showing that the covenantor adopted the document as his act and deed,is referred to as a document under seal.

Question 28

Quantum meruit does not refer to the reasonable amount that a person merits for goods and services provided.

Question 29

Why does the law recognize that a promise made properly under the seal of the promisor does NOT require consideration to make it binding?

Question 30

Mo agrees to provide lawn care services to Judith in preparation for a summer birthday party Judith is holding for family and friends.The agreement requires that Judith pay Mo $250.00 for three hours' work.After completing approximately half of the job,Mo requests that Judith pay him an extra $50.00 because the cost of gasoline used for the rider mower had gone up significantly that morning.Judith agrees to pay the additional $50.00.Is she legally liable to do so?

A)Yes she is,because she told Mo she would pay him and he finished the job on the basis of her promise.
B)Yes she is,because the rising price of gas should be borne by Judith.
C)No she isn't,because Mo had an existing contractual obligation to perform the services for $250.00 and there is no consideration for the subsequent agreement to pay $50.00 more.
D)No she isn't,because Judith is promising to reward Mo for something he has previously done and the past consideration is no consideration.

Question 31

Promissory estoppel can be used as the basis for a lawsuit.

Question 32

The reasonable amount that a person deserves to be paid for goods and services provided to the person requesting them is called

A)gratuitous promise.
B)quantum meruit.
C)damages.
D)covenant.
E)promissory amount.

Question 33

There is no contract unless each party intends to create a legally enforceable contract.

Question 34

Gratuitous promises are made without consideration.

Question 35

Where there is an existing contract between two parties and one party,to ensure performance by the other,promises something more,so long as the other party also gives something more,there is a binding contract and the first party must perform the new promise.

Question 36

A promise that is made without bargaining for or accepting anything in return is a

A)promissory estoppel.
B)covenant.
C)quantum meruit.
D)consideration.
E)gratuitous promise.

Question 37

When one party to a concluded contract promises the other party something more,why is the new promise not binding?

Question 38

A document made under seal does not require consideration.

Question 39

When we say that consideration is the price for a promise,what does price mean?

Question 40

All gratuitous promises are unenforceable.

Question 41

Why is a promise to perform a pre-existing legal duty not consideration?

Question 42

Is it possible for a person to enter into an enforceable contract without receiving any benefit from the agreement?

Question 43

Should promissory or equitable estoppel only be used as a defence?

Question 44

What is a gratuitous promise? Can such a promise support a contract?

Question 45

Today,the rule in Foakes v.Beer,that payment of a lesser sum in satisfaction of a greater sum is not payment at all,does not apply in Ontario.Explain.

Question 46

What is meant by "the meeting of minds"? How significant is it to the formation of contracts?

Question 47

Injurious reliance and equitable estoppel are two sides of the same coin.Explain.

Question 48

Nan promises not to sue Reg if he agrees to pay her $1000.Reg agrees to pay Nan $1000,but later discovers that she actually had no right to sue him.Is Reg bound to pay Nan?

Question 49

Motive is irrelevant to consideration.Explain.

Question 50

Why is an intention to create a legally binding contract an essential element of a valid enforceable contract?