Deck 11: Consideration

Question 1

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

Answer 1

False

Question 2

Two parties can mutually agree to rescind a contract if it is executory.

Answer 2

True

Question 3

In contract law,"consideration" refers to the time that a party takes to evaluate a deal.

Answer 3

False

Question 4

Rescission is the dissolution of a contract that returns the parties to the positions they held before the contract.

Question 5

Risks ordinarily assumed in business do not constitute consideration for the modification of a contract.

Question 6

Failing to use the word consideration in an agreement means that no consideration has been given.

Question 7

A promise to do something that one has a prior legal duty to do is not consideration.

Question 8

To be legally sufficient,consideration must include something of economic value.

Question 9

If a promise is made,it will be enforced.

Question 10

Rescission is the substitution of one party to a contract for a third party,who agrees to assume the contractual duties.

Question 11

A transaction that lacks a bargained-for exchange lacks an element of consideration.

Question 12

Use of the word consideration in an agreement means that consideration has been given.

Question 13

The preexisting duty rule permits a party who is bound by contract to perform a certain duty to use that duty as consideration for a second contract.

Question 14

A promise by one party to pay another for refraining from an act is enforceable.

Question 15

Parties are not generally free to make bad bargains.

Question 16

In contract law,"consideration" refers to the courtesy that one party shows another in negotiating a deal.

Question 17

Inadequate consideration may reflect a lack of bargained-for exchange.

Question 18

For consideration to have "legally sufficient value," it must consist of goods or money.

Question 19

Inadequate consideration may indicate undue influence.

Question 20

Courts typically consider the adequacy of consideration.

Question 21

A promise to pay for an act that has yet to occur is unenforceable.

Question 22

A release does not require consideration to be legally binding.

Question 23

Dave's Hobby Town and Eva's Yarn Shoppe are adjacent stores with adjoining parking lots. Dave offers Eva a discount on purchases from Dave's store if Eva will not tow the cars of Dave's customers who park in Eva's lot.
Refer to Fact Pattern 11-1.Eva's forbearance from towing is legally sufficient consideration

A)because it is a promise of something of value.
B)only if Dave's customers park in Eva's lot.
C)only if Eva's customers cannot park in her lot because it is full.
D)under no circumstances.

Question 24

If a debt is liquidated,an accord and satisfaction cannot take place.

Question 25

Promissory estoppel requires reliance of a substantial and definite character.

Question 26

In many states,a release requires a signed writing.

Question 27

A covenant not to sue always bars further recovery.

Question 28

Dave's Hobby Town and Eva's Yarn Shoppe are adjacent stores with adjoining parking lots. Dave offers Eva a discount on purchases from Dave's store if Eva will not tow the cars of Dave's customers who park in Eva's lot.
Refer to Fact Pattern 11-1.Dave's discount is legally sufficient consideration

A)because it is a promise of something of value.
B)only if Dave adds a cash rebate.
C)only if Eva uses it.
D)under no circumstances.

Question 29

An obligation is enforceable only if it is supported by past consideration.

Question 30

Triple-D Cinemas promises to pay Shakir $1,000 to repair and clean its marquee.The act of doing this work is

A)not consideration because its performance is a preexisting duty.
B)not consideration because its exchange is not a bargain.
C)consideration.
D)not consideration because its value is legally insufficient.

Question 31

An accord and satisfaction is used to discharge an unliquidated debt.

Question 32

A contract that one party retains the exclusive right to cancel at any time is unenforceable.

Question 33

A covenant not to sue is an agreement to substitute a contractual obligation for a legal action.

Question 34

A businessperson who sells a business in reliance on a promise by another may be entitled to damages under the doctrine of promissory estoppel.

Question 35

Braxton questions whether there is consideration for his contract with Tawny to exchange his accounting services for her payment of a certain amount.To constitute consideration,there must be

A)a payment of money.
B)a performance of services.
C)a bargained-for exchange.
D)detrimental reliance.

Question 36

A promise to do what one already has a legal duty to do is legally sufficient consideration.

Question 37

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

Question 38

Vince offers to buy a book owned by Sun-Hi for twice what Sun-Hi paid for it.She accepts and hands the book to Vince.Sun-Hi's delivery of the book is

A)not consideration because its transfer is a preexisting duty.
B)not consideration because its exchange is not a bargain.
C)consideration.
D)not consideration because its value is legally insufficient.

Question 39

The doctrine of promissory estoppel does not apply if there is a clear and definite promise.

Question 40

A release bars further recovery beyond the terms stated in the release.

Question 41

Joel contracts to hire Huong for one year to tend the orchids in his commercial greenhouse but reserves the right to cancel the employment on one month's notice at any time after Huong begins work.This promise is

A)enforceable.
B)illusory.
C)unliquidated.
D)unforeseen.

Question 42

Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 11-2.A court is most likely to evaluate the adequacy of consideration if

A)a thing exchanged has no intangible value to one of the parties.
B)something exchanged is not of direct economic or financial value.
C)the items exchanged were of unequal value.
D)there is a gross disparity in the value of the consideration exchanged.

Question 43

Suki works for Renaldo.At the end of her first year,Renaldo promises to pay her a bonus for her "four quarters of success." Renaldo's promise is

A)unenforceable because Suki's performance was a preexisting duty.
B)unenforceable because Suki's performance is past.
C)enforceable.
D)unenforceable because Suki's performance is not legally sufficient.

Question 44

Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay.
Refer to Fact Pattern 11-3.If CCC offers,as a reason for the extra $100,000,that extraordinary unforeseen difficulties will add considerable cost to the project,the agreement is

A)enforceable as an accord and satisfaction.
B)enforceable because of unforeseen difficulties.
C)unenforceable as an illusory promise.
D)unenforceable due to the preexisting duty rule.

Question 45

Numeric Methods Corporation promises to give stock options to Orin,a project schedule manager,for projects that have already been completed ahead of schedule.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)unenforce?able.

Question 46

Sonic Board Corporation files a suit against Custom Fabricators Company,claiming that the consideration for their contract is inadequate.The court will most likely not examine the adequacy of the consideration if

A)there is a large disparity in the amount of consideration exchanged.
B)Sonic asserts that there is inadequate consideration.
C)something of value passed between the parties.
D)the consideration is worth less than $100.

Question 47

Nationwide Business Company and One-State Sales,Inc.,agree to simultaneously rescind their contract and enter into a new agreement under which their duties are the same.Nationwide later sues One-State to enforce the new agreement.The court

A)may apply the preexisting rule or allow the rescission.
B)must allow the rescission.
C)must apply the preexisting duty rule.
D)must not apply the preexisting rule or allow the rescission.

Question 48

General Credit Corporation promises to pay its chief finance officer Hughie and other employees a year-end bonus "if it seems like a good idea at that time." This is

A)an enforceable contract.
B)an illusory contract.
C)an unconscionable contract.
D)a unilateral contract.

Question 49

Sal contracts with Tasty Pizza Company to deliver its frozen pizza and pasta products to U-Chuse Market and other grocery stores. Both parties change their minds, however, and inform each other that they would like to cancel the contract.
Refer to Fact Pattern 11-4.The next day,Sal changes her mind again and once more offers to deliver Tasty's products.Tasty is willing to deal,but for a new price.Sal and Tasty

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 50

Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay.
Refer to Fact Pattern 11-3.If CCC offers no reason for the extra $100,000,but says only that it will otherwise stop construction,the agreement is

A)enforceable as an accord and satisfaction.
B)enforceable because of unforeseen difficulties.
C)unenforceable as an illusory promise.
D)unenforceable due to the preexisting duty rule.

Question 51

Sal contracts with Tasty Pizza Company to deliver its frozen pizza and pasta products to U-Chuse Market and other grocery stores. Both parties change their minds, however, and inform each other that they would like to cancel the contract.
Refer to Fact Pattern 11-4.Sal and Tasty

A)may rescind their entire contract.
B)may rescind their contract to the extent that it is executory.
C)must perform their entire contract.
D)must perform the part of their contract that is executory.

Question 52

Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 11-2."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 53

Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 11-2.If,as Brad claims,the consideration in this problem is inadequate,it may indicate a lack of

A)accord in Brad's satisfaction with the value of the deal.
B)bargained-for exchange or mutual assent.
C)flexibility on the part of College Credit to accommodate Brad's needs.
D)"heft," "substance," or "weight" in the terms of the contract.

Question 54

Leif offers Miley $1,000 for her three-year-old laptop computer.Miley 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 55

Jean promises to pay Khalil $500 because "he does not have as much money as other people." Jean'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 Jean could have given more.
D)not enforceable because Khalil has not given consideration in return.

Question 56

Superior-Plus Properties,Inc.,and Topps Construction Company sign a contract that specifies the amounts to be paid for a building project at various stages and on its completion.Additional compensation may be justified by

A)any business obstacles that arise after the time of the contract.
B)changes in the market price of needed materials during the contract.
C)extraordinary difficulties unforeseen at the time of the contract.
D)no circumstances.

Question 57

Jen questions whether there is consideration for her contract with Isaac to exchange her catering services for his payment of a certain amount.To constitute consideration,the value of whatever is exchanged must be

A)objectively worthy.
B)grossly inadequate.
C)legally sufficient.
D)practically sound.

Question 58

Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay.
Refer to Fact Pattern 11-3.If CCC offers,as a reason for the extra $100,000,that ordinary business expenses have increased,the agreement is

A)enforceable as an accord and satisfaction.
B)enforceable because of unforeseen difficulties.
C)unenforceable as an illusory promise.
D)unenforceable due to the preexisting duty rule.

Question 59

Under a contract with Bucolic Farms,Agro Excavation,Inc.,begins digging an agricultural pond.In mid-project,Agro asks for $15,000 over the contract price,claiming an increase in the "cost of doing business." Bucolic agrees but later refuses to pay.Their agreement is

A)unenforceable because Agro's performance was a preexisting duty.
B)unenforceable because Bucolic's promise was illusory.
C)enforceable.
D)unenforceable because its performance is unforeseeably difficult.

Question 60

Baked Stuff Company agrees to supply Comida Café with all the corn chips that it requires for a year.A sudden blight caused by an organism hitherto unknown in the United States results in a shortage of corn,and the price rises sharply.Baked Stuff asks Comida to pay a higher price for the chips.This request is

A)invalid as an attempt at extortion or the so-called holdup game.
B)invalid under the preexisting duty rule.
C)valid as a risk ordinarily assumed in business.
D)valid due to the unforeseen difficulty of the sudden price increase.

Question 61

In a skateboarding accident with Ryan,Starla is injured.Ryan's insurance company's offers her $25,000 to release him from liability,and she accepts.Later,she learns that her injuries are more serious than she realized.The release

A)bars Starla's further recovery from Ryan.
B)is unenforceable because Starla's injuries are unforeseeably difficult.
C)is unenforceable because Ryan has a preexisting duty to pay.
D)is unenforceable because the release is an illusory promise.

Question 62

Herm promises to pay Nixie to work as an assistant buyer for his Organic Foods stores.Nixie agrees and quits her job with Pic-U Grocery,but Herm does not hire her.Herm is most likely liable to Nixie under

A)the concept of accord and satisfaction.
B)the doctrine of promissory estoppel.
C)the preexisting duty rule.
D)no circumstances.

Question 63

Berkie's bicycle is damaged in an accident caused by Imogene.Berkie agrees not to sue Imogene if she will pay for the damage.If she fails to pay,Berkie can bring an action for breach of contract.This is

A)a covenant not to sue.
B)an accord and satisfaction.
C)an illusory promise.
D)a release.

Question 64

Auto Body Repair Shop (ABRS)promises to pay Ben $1,000 a week to work for ABRS.Ben accepts and quits his job with Car Care Service.ABRS fails to provide a job for Ben.Ben has a cause of action based on

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

Question 65

Mei writes a check to Nat in an amount that represents half of her debt to him.On the back of the check,Mei includes the words "payment in full." Nat cashes the check.This discharges the entire debt

A)if the debt is liquidated.
B)if the debt is past due.
C)if the debt is unliquidated.
D)under no circumstances.

Question 66

Real Estate Investments,Inc.,owns and manages an office building.Secure Insurance Company agrees to lease the building for five years.Under the lease,Secure is obligated to pay all of the utility costs.Two years into the term,Secure asks Real Estate to modify the lease to provide that the utility costs be split equally between them.Real Estate agrees,but later decides it does not want to share the costs and refuses to pay.Is the landlord bound to its agreement to share the utility costs Why or why not

Question 67

Dag and Enita are in an auto accident. Dag offers Enita $2,000 if she promises not to pursue her potential legal claim against him. Enita agrees. Later, Enita discovers that it will cost $1,500 to repair her car and $4,000 to cover her medical expenses for a latent injury.
Refer to Fact Pattern 11-5.The agreement between Dag and Enita is

A)a covenant not to sue.
B)an accord and satisfaction.
C)a release.
D)promissory estoppel.

Question 68

George and Halle disagree as to the exact amount one owes the other.They form a new agreement that,on fulfillment,will discharge the prior obligation.This is

A)a covenant not to sue.
B)an accord and satisfaction.
C)a release.
D)promissory estoppel.

Question 69

Milo files a suit against Neighbors Insurance Corporation under the doctrine of promissory estoppel.Milo must show that

A)Milo justifiably refused to fulfill a promise to Neighbors.
B)Milo justifiably relied on Neighbors's promise to his detriment.
C)Neighbors justifiably refused to fulfill a promise to Milo.
D)Neighbors justifiably relied on Milo's promise to its detriment.

Question 70

Cato promises Isabella $40,000 if she graduates from State College.Isabella enrolls in State,attends full-time for four years,and graduates.When she asks Cato for $40,000,he says,"I don't remember promising you $40,000.But if there was a promise,it's not enforceable,because we didn't bargain for it.And even if there was a promise that would otherwise be enforceable,I revoke it now." Can Isabella enforce Cato's "promise" Why or why not

Question 71

XL Retail Sales,Inc.,promises its head buyer Yancey and other salaried employees a bonus at the end of the year if management thinks that the circumstances indicate "a job well done." This promise is

A)enforce?able.
B)unenforce?able because it is not supported by consideration.
C)unenforce?able because the dollar amount is missing.
D)unenforce?able because the employees are paid salaries.

Question 72

Dag and Enita are in an auto accident. Dag offers Enita $2,000 if she promises not to pursue her potential legal claim against him. Enita agrees. Later, Enita discovers that it will cost $1,500 to repair her car and $4,000 to cover her medical expenses for a latent injury.
Refer to Fact Pattern 11-5.In Enita's suit against Dag to recover her repair and medical expenses,Enita will most likely recover

A)half the amount to pay those costs over what Dag already paid her.
B)nothing.
C)the estimated amount to pay those costs and any other liability.
D)the exact amount to pay those costs and no more.