Deck 8: Consideration

Question 1

Mark owes $2000 each to his business partners, Ryan, Bryan, and Clark. Since Mark is facing financial difficulties, his business partners agree to accept a total amount of $4800 from Mark as a cancellation of the unpaid balance due to them. This type of an agreement is known as a _____.

A) composition of creditors
B) writ of certiorari
C) forbearance
D) promissory estoppel

Answer 1

A

Question 2

As a general rule, a promise must be supported by consideration. Which of the following is an exception to the rule and can be enforced without the support of consideration?

A) A non-charitable enterprise financed by the subscriptions of individuals
B) A promise to refrain from doing what one has no right to do
C) An act performed prior to the promise made by the promisor
D) An obligation of record such as a judgment

Answer 2

C

Question 3

If the supposed consideration consists merely of a promise to do what one is already legally obligated to do, consideration is invalid.

Answer 3

True

Question 4

When one refrains or promises to refrain from doing something, this conduct is known as _____.

A) duress
B) forbearance
C) negligence
D) disaffirmation

Question 5

When charitable enterprises are financed by voluntary subscriptions of many people, the promise of each person is generally not held to be enforceable.

Question 6

If the debt is evidenced by a note or other written evidence, cancellation and return of the written evidence cancels the debt.

Question 7

Consideration can constitute financial or non-financial items.

Question 8

Which of the following is true of the arrangement of composition of creditors?

A) It results in the debtor paying a fine to creditors if he makes the payment after the due date.
B) It involves creditors offering an extended time period during which the due payment can be made.
C) It occurs when multiple creditors settle in full for a fraction of the amount owed.
D) It refers to creditors recovering a 10 percent higher amount than what is due to them.

Question 9

Which of the following is true of the doctrine of promissory estoppel?

A) It requires that promises made should be supported by consideration.
B) It permits the promisor to claim lack of consideration when the promisee acts in reliance on his promise.
C) It requires the promisor to reasonably expect the promise to induce action by the promisee.
D) It holds enforcement to be proper if the promisee would not be harmed if the promise were not enforced.

Question 10

Blake has subscribed to a local charitable association where he needs to make a monthly payment of $100. However, a few months later, Blake stops paying this amount. Which of the following exceptions to the requirement of consideration will enforce that Blake pays the amount?

A) Composition of creditors
B) Voluntary subscriptions
C) Forbearance to cancel monthly subscriptions
D) Modification of sales contracts

Question 11

Pledges made by people to charitable associations have no binding power by law.

Question 12

Consideration distinguishes mere agreements from legally enforceable obligations.

Question 13

Which of the following best describes the term "consideration"?

A) It refers to the record of a case sent for review to a higher court.
B) It refers to the promisor refraining from meeting a promise.
C) It signifies a promissory note given by the promisor as a token of the transaction.
D) It indicates what the promisor demands and receives as the price for a promise.

Question 14

For a promise to constitute consideration, the promise must prevent imposing an obligation on the person making it.

Question 15

As a general rule, a promise must be supported by consideration. Describe any two exceptions to this rule.

Question 16

Performing or promising to perform what one is already obligated to do is a valid consideration.

Question 17

Which of the following is an example of a valid consideration?

A) A promises to sell paint to B when the shipment arrives.
B) A promises to pay B if he stops driving above the speed limit.
C) A promises to pay B if he refrains from committing theft.
D) A promises to paint B's house if B leaves the house for two days.

Question 18

As a general rule, the adequacy of the consideration is irrelevant because the law allows bargains.

Question 19

The Uniform Commercial Code states that when a contract for the sale of goods is modified by agreement of the parties, consideration is necessary to make it enforceable.

Question 20

When a new contract is replaced with an old one, it is mandatory for the added features to be equal for both parties for the contract to be enforceable.