Deck 10: Agreement and Consideration

Question 1

Section 24 of the Restatement (Second)of Contracts defines a(n)________ as the manifestation of willingness to enter into a bargain,so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

A) order
B) offer
C) advertisement
D) revocation

Answer 1

B

Question 2

Which of the following is a necessary prerequisite for legally claiming a reward?

A) A promise of completing the requested act is sufficient for a claimant to claim the reward.
B) Knowledge of the reward before completing the requested act is necessary to claim the reward.
C) The claimant can claim the reward even if he or she came to know of the reward subsequent to completing the act.
D) The offeror cannot withdraw the reward once the offer has been placed in the public domain.

Answer 2

B

Question 3

Which of the following would be considered an offer to form a unilateral contract?

A) advertisement
B) auction without reserve
C) reward offer
D) auction with reserve

Answer 3

C

Question 4

What is the key difference between an agreement and a contract?

A) A contract is always enforceable in the court of law, while an acceptance may or may not be.
B) A contract can only be between two individuals, while an acceptance can have two or more people involved.
C) A contract requires mutual assent from all parties, while an acceptance only requires a majority approval.
D) A contract need not be legally binding, while an agreement must be legally binding.

Question 5

A term in a contract that can reasonably be supplied by the courts is referred to as an ________.

A) intent term
B) unconditional term
C) objective term
D) implied term

Question 6

Which of the following statements is true of an offer that was not communicated?

A) The offer stays valid for 30 days from the date of creation.
B) The offer cannot be accepted by the offeree if not communicated.
C) The offeree can claim an offer that was not communicated.
D) It is considered to be an implied term.

Question 7

Mandy decided to sell her iPad,and made an offer to her friend Shelly for $250.Shelly told Mandy she is willing to buy the iPad,but would be glad if Shelly could lower her asking price.Mandy lowered the price to $210 and Shelly bought it.Which of the following would describe Shelly's response to Mandy for her second offer?

A) counteroffer
B) rejection
C) equivocal acceptance
D) grumbling acceptance

Question 8

Which one of the following scenarios would entitle a reward?

A) a person buying a car after seeing an ad about it
B) a person returning a lost item after seeing an ad about it
C) a seller accepting a bid for an item
D) a seller making an invitation for offers

Question 9

The ________ rule is a rule which states that for an acceptance to exist,the offeree must accept the terms as stated in the offer.

A) mirror image
B) mailbox
C) shadow box
D) rejection-upon-dispatch

Question 10

A(n)________ is a voluntary exchange of promises between two or more legally competent persons to do,or refrain from doing,an act.

A) offer
B) advertisement
C) agreement
D) proposal

Question 11

________ is a manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer as measured by the objective theory of contracts.

A) Acceptance
B) Revocation
C) Proposal
D) Counteroffer

Question 12

Jennifer had put up a reward offer,in the local newspaper,for her lost watch for two weeks now.But after buying a new watch,Jennifer decided to not pursue her old watch,and so decided not to put up the reward offer in the third week.Betty,who found the watch,and saw the reward offer,returned the watch to Jennifer during the third week.Which of the following would be true about Betty receiving chances of receiving the reward?

A) Betty will not receive the reward as Jennifer had already revoked it.
B) Betty will not receive the reward as Jennifer had stopped publishing the reward offer.
C) Betty cannot claim the reward because she had not performed all the requested acts.
D) Betty can claim the reward because Jennifer had not published a notice of revocation.

Question 13

Which of the following is true of acceptance of a contract?

A) Bilateral contracts can be accepted only by an offeree's performance of the required act.
B) Unilateral contracts can be accepted only by an offeror who promises to perform the requested act.
C) Bilateral contracts can be accepted by an offeror who promises to perform the requested act.
D) Unilateral contracts can be accepted only by the offeree's performance of the required act.

Question 14

Which of the following is true for an auction without reserve?

A) The bidder is considered the offeror.
B) The seller need not accept the highest bid.
C) The goods on sale cannot be withdrawn.
D) The auctioneer is not allowed to set a minimum bid.

Question 15

The legal power to accept an offer belongs to the ________.

A) offeror
B) offeree
C) agent
D) seller

Question 16

Quentin is a member of the Album of the Month Club and receives a new music CD every month without fail.The Club usually gives its members a time period within which they can reject the selection and stop shipment of the CD,failing which the CD will be shipped.Last month,Quentin received a CD from the Club,a copy of which a friend had already gifted him.He had not found time to reject the offer as he was busy.Quentin could not reject the CD and had to buy it.What kind of an offer-acceptance is exemplified in this scenario?

A) mirror image rule acceptance
B) silence as acceptance
C) acceptance-upon-dispatch
D) unequivocal acceptance

Question 17

An invitation to make an offer or an actual offer is referred to as a(n)________.

A) sale
B) reward
C) advertisement
D) bid

Question 18

In which of the following offers is the seller forbidden from withdrawing goods from sale?

A) revocation
B) reward
C) auction with reserve
D) auction without reserve

Question 19

Which of the following is true for an auction with reserve?

A) The seller retains the right to refuse the highest bidder.
B) Invitations to make an offer are not allowed.
C) Goods cannot be withdrawn from sale after the offer has been made.
D) A bid once made cannot be withdrawn and is legally binding.

Question 20

Which of the following is true of legally claiming a reward?

A) A promise of completing the requested act is sufficient for a claimant to claim the reward.
B) The offeree must perform the requested act to claim the reward.
C) The claimant can claim the reward even if he or she came to know of the reward subsequent to completing the act.
D) The offeror cannot withdraw the reward once the offer has been placed in the public domain.

Question 21

The term ________ refers to a mode of acceptance that is indicated from what is customary in similar transactions,usage of trade,or prior dealings between the parties.

A) express authorization
B) implied authorization
C) option contract
D) unequivocal acceptance

Question 22

A(n)________ is a withdrawal of an offer by the offeror that terminates the offer.

A) rejection
B) advertisement
C) revocation
D) counteroffer

Question 23

Luke offered to sell his farm to Kent at $75,000,an offer which Kent declined.A week later,Luke offered to sell the farm for $65,000,stating that it was the final offer,it was valid for one month,and that he would not alter it.Two days later,Kent replied by saying that he was willing to pay $60,000 for the farm.A week after Luke received Kent's offer,Luke declined it.Ten days after that,Kent agreed to buy the farm for $65,000,but Luke refused to sell the farm.Kent decided to sue Luke for a breach of contract.The judge ruled in favor of Luke.Which one of the following is the reason for the ruling in Luke's favor?

A) Luke's original offer of $75,000 is still valid, even though rejected.
B) Kent's counteroffer of $60,000 had rendered the offer for $65,000 invalid.
C) Kent's acceptance was past the set time period in the offer.
D) Kent acted in an incompetent manner with regards to the offer.

Question 24

Which of the following is a difference between acceptance and revocation?

A) Revocation is valid only if the offeree receives it, while an offeree's acceptance is valid when dispatched.
B) Revocation can be done by the offeror or offeree, while an acceptance can only be done by the offeree.
C) An acceptance must be received by the offeror to be valid, while a revocation need not be received by the offeree.
D) A revocation can be made after acceptance, while an acceptance cannot be made after revocation.

Question 25

Which of the following statements is true about a revocation?

A) It can be made by the offeree.
B) It needs to reach the offeree to be effective.
C) It can be done even after acceptance of the offer.
D) It can be applied to an option contract.

Question 26

The revocation of an offer is effective when it is ________.

A) dispatched by the offeree
B) dispatched by the offeror
C) received by the offeree
D) received by the offeror

Question 27

If a hurricane destroys a mansion that has been listed for sale,the offer is automatically terminated due to ________.

A) supervening illegality
B) death or incompetency of the offeror
C) destruction of the subject matter
D) lapse of time

Question 28

The mirror image rule states that ________.

A) the offeree's counteroffer should match the value of the offeror's offer
B) the offeree is allowed to modify the terms of the offer
C) the offeror can modify the terms of the offer even after the offeree has accepted it
D) the offeree must accept the terms as stated in the offer

Question 29

Which of the following is true about an option contract?

A) If the offeree chooses not to buy the property, the money paid in consideration must be returned.
B) If money is paid as consideration, then that is not applied to the sale price.
C) Death or incompetency of either party terminates an option contract.
D) The offer cannot be revoked during the option period.

Question 30

________ is a stipulation in an offer that says the acceptance must be by a specified means of communication.

A) Option contract
B) Mirror image rule
C) Implied authorization
D) Express authorization

Question 31

Which of the following contradicts the mirror image rule?

A) silence as acceptance
B) option contract
C) counteroffer
D) acceptance-upon-dispatch

Question 32

An agreement that an offeror will not sell his property for a specified period subsequent to the offeree paying consideration to the offeror is referred to as a(n)________.

A) unequivocal acceptance
B) contract of adhesion
C) option contract
D) firm offer

Question 33

Which of the following statements is true about a counteroffer?

A) An offeree that makes the counteroffer is still considered the offeree.
B) A counteroffer terminates the existing offer.
C) A counteroffer can only be made by the offeror.
D) A counteroffer need not be communicated to the offeror.

Question 34

A counteroffer is effective when it is ________.

A) dispatched by the offeree
B) dispatched by the offeror
C) received by the offeree
D) received by the offeror

Question 35

A response by an offeree that contains terms and conditions different from or in addition to those of the offer is called a(n)________.

A) rejection
B) counteroffer
C) revocation
D) acceptance

Question 36

Techstate,a hardware manufacturer in the United States,has an existing contract with a client based in the Republic of Karthasia,which is going through a civil war.The resulting upheaval in that country has led to some of the shipments to the client being destroyed by warring factions.As a sanction against the country,the United States government places an embargo on all exports to that country by U.S.firms.What will be the state of the contract between Techstate and the client in Karthasia after the embargo?

A) It will be terminated due to destruction of subject matter.
B) It will be terminated due to incompetency of the offeror.
C) It will be terminated due to lapse of time.
D) It will be terminated due to supervening illegality.

Question 37

Peter has two houses that he plans to sell,numbered Lot 1 and Lot 2,each priced at $800,000.David has shown interest in buying Lot 2 but is not able to make up his mind on the final offer,so he asks Peter to give him a week to decide and Peter accepts.But David takes two weeks to get back to Peter with a counteroffer.Before he could give David a reply to his counteroffer,Peter is killed in a fire that burned down Lot 1.Which of the following would be true of this case?

A) The offer is terminated due to lapse of time.
B) The offer is terminated due to destruction of the subject matter.
C) The offer is terminated due to death of the offeror.
D) David can still buy the house for Peter's original offer.

Question 38

The rejection of an offer is effective when it is ________.

A) dispatched by the offeree
B) dispatched by the offeror
C) received by the offeree
D) received by the offeror

Question 39

An acceptance for a bilateral contract is effective when it is ________.

A) dispatched by the offeree
B) dispatched by the offeror
C) received by the offeree
D) received by the offeror

Question 40

An offer is terminated on the grounds of "supervening illegality" when ________.

A) the set period in the offer has expired
B) the subject matter in the offer has been destroyed
C) a statute or court decision deems an object of the offer unlawful
D) the offeror or offeree passes away prior to the offer being accepted

Question 41

________ is a promise to refrain from doing an unlawful act and therefore is a promise that will not support a contract.

A) Preexisting duty
B) Illusory promise
C) Illegal consideration
D) Gift promise

Question 42

Unless otherwise stated,an offer made face-to-face or during a telephone call usually expires ________.

A) after a few weeks
B) when the conversation ends
C) after a few years
D) when one of the parties makes a counteroffer

Question 43

Mary buys a lottery ticket and promises to buy her friend Sharon a new pair of shoes if she checks the lottery results while Mary is away.Sharon agrees to do so provided she has the time for it.If Sharon fails to check the results and Mary wins the lottery,which of the following would be true for the contract between Mary and Sharon?

A) Mary can claim for breach of contract against Sharon.
B) Sharon can claim for breach of contract against Mary.
C) Neither Mary nor Sharon can claim breach of contract.
D) Mary's promise is supported by consideration.

Question 44

Which of the following can convert a gift promise into an enforceable promise?

A) if the promisee offers a consideration
B) if the promisor offers a consideration
C) if the promisee receives a legal benefit
D) if the promisor suffers a legal detriment

Question 45

To meet contractual legality,considerations must be ________.

A) beneficial to both parties involved
B) detrimental to both parties involved
C) mentioned in writing in the contract
D) bargained-for exchange of promise for performance

Question 46

Which of the following is true about a promissory estoppel?

A) It is invoked in cases having option contract infringements.
B) It permits a court to order enforcement of a contract that lacks consideration.
C) It allows for a party to claim goods, which were revoked, for which it has already paid consideration.
D) It is invoked in cases that involve a promissory note to pay considerations at a later time.

Question 47

An offer is terminated on the grounds of "lapse of time" if ________.

A) the offeror dies before the offeree has accepted the offer
B) the offer is not communicated to the offeree
C) the offeror has communicated to the offeree a set time which is not mentioned in the offer
D) the offer is not accepted within a stated time period

Question 48

Which of the following is true for an accord?

A) The accord terminates the original contract.
B) The non-breaching party cannot enforce the original contract if the accord is not satisfied.
C) It is enforceable even though no new consideration is given.
D) An accord is only reached when both parties of the contract fail to meet their contractual obligations.

Question 49

A(n)________ is an agreement whereby the parties agree to accept something different in satisfaction of the original contract.

A) counteroffer
B) accord
C) promissory estoppel
D) mirror image acceptance

Question 50

A contract into which both parties enter but in which one or both of the parties can choose not to perform their contractual obligations is known as a(n)________.

A) illusory promise
B) gift promise
C) preexisting duty
D) illegal consideration

Question 51

Dean Campenella is a detective with the California state police.During the investigation of a missing child,Campenella found new clues that led to the capture of a serial killer involved in another case.Since Campenella was not involved in the serial killer case and found the clues while investigating another case,Campenella demanded a special reward from the state police department for helping catch the killer.But his demand was declined citing lack of consideration.Campenella's demand lacks consideration under ________.

A) preexisting duty
B) illegal consideration
C) gift promise
D) illusory promise

Question 52

With regard to unenforceable contracts,an extortion call in which a man agrees to pay money in return for his family's safety would be considered as a(n)________.

A) preexisting duty
B) illusory promise
C) illegal consideration
D) past consideration

Question 53

Hartman,who has worked for Aratize,Inc.for 25 years,is retiring.Upon hearing the news of his retirement,the president of Aratize announces a bonus of $250,000 to Hartman for his exceptional services toward Aratize thus far.But upon retiring,Hartman isn't paid the bonus.Hartman decides to sue the president and Aratize to recover the promised bonus.Which of the following is true of this case?

A) It will be enforceable in court because it is a gift promise.
B) It will not be enforceable in court because of past consideration.
C) It will not be enforceable because the president is not authorized to make such a promise.
D) It will not be enforceable because it is an unlawful consideration.

Question 54

________ is an equity doctrine that permits a court to order enforcement of a contract that lacks consideration.

A) Illusory promise
B) Gift promise
C) Promissory estoppel
D) Option contract

Question 55

A contract is said to have legal value if ________.

A) both the promisor and the promisee receive a legal benefit
B) the promisor suffers a legal detriment
C) the promisee suffers a legal detriment
D) the promisee receives a legal benefit

Question 56

Ahmed agrees to trade his copy of the collector's edition "Initial Fantasy VI" for a new copy of "Phobiaman: The Journey Beyond Fear." He then finds out that the "Phobiaman" series has been banned due to objectionable content.The offer is automatically terminated due to ________.

A) supervening illegality
B) lapse of time
C) death or incompetency
D) destruction of the subject matter

Question 57

George made an offer to Jacob to sell his house for $1 million.The offer was received by Jacob on the 1st of May,and he stipulated that he had 13 days to accept.But Jacob could not arrange the money,and on 16th May,he made a counteroffer to George to buy the house for $850,000.Which of the following is true about the original offer made by George to Jacob?

A) It is terminated by the counteroffer.
B) It is still valid as the house has not been sold.
C) It is invalid due to lapse of the stated time.
D) It is invalid due to incompetency of the offeree.

Question 58

Which of the following is true of a gift promise?

A) A gift promise can be enforced in a court of law.
B) A completed gift promise cannot be cancelled for lack of consideration.
C) A gift promise contains considerations.
D) The promisee can take legal action if the promisor does not uphold the promise.

Question 59

Why does an illusory contract lack consideration?

A) because the consideration promised is unlawful and therefore void
B) because the person promises to perform an act or do something he is already under an obligation to do
C) because one or both parties can choose not to perform their contractual obligations
D) because the compensation paid is for work done in the past

Question 60

A promise lacks consideration if a person promises to perform an act or do something he is already under an obligation to do.This is called a(n)________.

A) illegal consideration
B) preexisting duty
C) gift promise
D) illusory promise

Question 61

If the object of an offer is made illegal after the acceptance of the offer,it is termed as a supervening illegality.

Question 62

An offer terminates if the subject matter of the offer is destroyed through the fault of either party after the offer's acceptance.

Question 63

A rejection is a withdrawal of an offer by the offeror that terminates the offer.

Question 64

Mutual assent is not required for a contract to exist.

Question 65

The mailbox rule is a rule which states that for an acceptance to exist,the offeree must accept the terms as stated in the offer.

Question 66

Gift promises lack consideration.

Question 67

A counteroffer by the offeree simultaneously terminates the offeror's offer and creates a new offer.

Question 68

A term in a contract that can reasonably be supplied by the courts is called an implied term.

Question 69

An auction without reserve is one in which the seller retains the right to refuse the highest bid and withdraw the goods from sale.

Question 70

All the states in the United States are consistent in applying the mailbox rule to email acceptances.

Question 71

The revocation of an offer is effective when received by the offeree.

Question 72

Prior to acceptance of an offer,the death or incompetency of either the offeror or the offeree terminates an offer.

Question 73

If the offeror withdraws the offer any time prior to its acceptance by the offeree,it is termed a revocation.

Question 74

If the offeree uses an unauthorized means of communication,despite a stipulation of express authorization,to transmit the acceptance,the acceptance is not effective.

Question 75

An auction with reserve is one in which the seller expressly gives up his or her right to withdraw the goods from sale and must accept the highest bid.

Question 76

A counteroffer is effective when dispatched by the offeree.

Question 77

The person who makes the offer is called the offeree and the person to whom the offer is made is called the offeror.

Question 78

A contract that arises from a bargained-for exchange is automatically voided.

Question 79

A stipulation in an offer that says the acceptance must be by a specified means of communication is known as an express authorization.

Question 80

The mirror image rule is a rule which states that an acceptance is effective when it is dispatched,even if it is lost in transmission.