Deck 6: Formation of a Contract: Consideration, and Intention to Create Legal Relations

Question 1

The reasonable bystander test is

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

Answer 1

C

Question 2

Consideration is an essential element in the formation of contract

A) because the law of contracts is based on the concept of bargain.
B) because parties must give careful consideration to the contract they are entering into.
C) because the courts will not make a contract for the parties.
D) because it is concerned with various considerations that go into the formation of contracts.
E) because the person who make the promise, needs to be sure he or she wants to make a contract before the offer is made.

Answer 2

A

Question 3

"I will pay you $100 if you smile", is

A) an offer.
B) consideration.
C) not a contract.
D) an invitation to treat.
E) a gratuitous promise.

Answer 3

C

Question 4

Jack and Jill are friends. Jack agrees to do mow Jill's lawn and Jill agrees to pay $50.00. Jill wants the lawn mowed by April 1, 2002. Jill returns on April 3, 2002 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) Jill has an obligation to pay the additional $20.00 because a legally enforceable promise to pay was made.
B) There was no offer and acceptance.
C) Jill have 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.
D) Jill made an offer and Jack accepted it so a contract was created.
E) Jack can sue Jill for breach of contract.

Question 5

Consideration is

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

Question 6

Which of the following is NOT true about consideration?

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

Question 7

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

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

Question 8

Quantum meruit is

A) the amount of money that a person is entitled to be paid under the terms of a contract.
B) the amount of compensation that a person is entitled to be paid if a party breaches a contract.
C) the amount that a person merits to be paid for services or goods provided to the person who requests them.
D) the amount of compensation to which a party is entitled for losses flowing indirectly from a breach of contract.
E) the extent of the loss that a person incurs from a breach of contract.

Question 9

A gratuitous promise differs from a contract in that

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

Question 10

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

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

Question 11

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

Question 12

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

Question 13

When a contract is sealed,

A) a party indicates his or her intention to be bound by the terms because a breach of contract could result.
B) the document is tightly closed.
C) the document may be used as evidence in court proceedings.
D) a party indicates his or her intention to be bound by the terms of a contract even though the promisee may not have provided consideration to support the promise.
E) the promisor swears an affidavit that the contents of the document are true.

Question 14

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

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

Question 15

The contractual requirement of consideration provides that

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

Question 16

The concept of estoppel is

A) where the terms of the contract require that one of the parties be stopped from performing a particular act.
B) where the promisee is stopped from denying the truth of a fact or statement.
C) where the court stops a party from performing a contract.
D) where 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.
E) where the court suspends the operation of the contract.

Question 17

The principle of injurious reliance is

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

Question 18

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

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

Question 19

Jack is trying to start his car in the winter and the car will not start. In frustration, Jack yells to a passer by "I'll sell you this piece of junk for $10." The passer by says, "great, I'll take it." Which of the following is true?

A) An enforceable contract arises between Jack and the passer by. This contract may be enforced in court.
B) The statement of Jack is an offer.
C) There is no enforceable contract because the passer by did not provide any consideration.
D) The statement Jack makes is an invitation to treat.
E) A statement made in frustration may give rise to a contract.

Question 20

Where there is an implied promise to pay for what services rendered are reasonably worth, it is referred to as

A) implied price.
B) quantum meruit.
C) implied value.
D) quasi price.
E) direct cost.

Question 21

Banks ensure that contracts are binding by affixing seals to them after they are signed.

Question 22

Promissory estoppel cannot be used as a defence.

Question 23

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

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

Question 24

Promissory estoppel can be used as the basis for a law suit.

Question 25

What is a gratuitous promise?

Question 26

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) enforceable because it gives rise to a contract.
E) unenforceable because it is a gratuitous promise.

Question 27

An intention to create legal relations exists if

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

Question 28

What is past consideration?

Question 29

Gratuitous promises are made without consideration.

Question 30

Motive is irrelevant to consideration. Explain.

Question 31

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

Question 32

Promissory estoppel can only be used as a defence.

Question 33

There is no contract unless each party intends to enter into a contract.

Question 34

Estoppel is a rule that prevents a person from disputing or retracting a statement or promise made earlier.

Question 35

A document made under seal, does not require consideration.

Question 36

The moral duty on the party of a promisor to perform his promise is called

A) injurious reliance.
B) consideration.
C) civic duty.
D) moral cause.
E) estoppel.

Question 37

All gratuitous promises are unenforceable.

Question 38

Quantum meruit refers to compensation for breach of contract.

Question 39

What is the effect of sealing a contractual document?

Question 40

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

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

Question 41

The use of a seal to make a promise binding does not do away with the need for the other elements of a valid contract. Explain.

Question 42

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

Question 43

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

Question 44

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

Question 45

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

Question 46

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

Question 47

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?