Deck 12: Consideration

Question 1

A bargained-for exchange is one of the elements of consideration.

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

If a promise is made, it will be enforced.

Question 9

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

Question 10

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

Question 11

Extraordinary difficulties that were unforeseen at the time a contract was formed do not justify a demand for additional compensation.

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

Normally, a court of law will not question the adequacy of consideration.

Question 17

Parties are not generally free to bargain as they wish.

Question 18

Inadequate consideration may indicate undue influence.

Question 19

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

Question 20

Unforeseen difficulties that justify a demand for additional compensa?tion in?clude risks ordinarily assumed in business.

Question 21

Cashing a check in an amount for less than a balance owed and on which the debtor has written "payment in full" will discharge a liquidated debt.

Question 22

A release does not require consideration to be legally binding.

Question 23

A businessperson who sells a business in reliance on promises by an?other is not entitled to damages under the doctrine of promissory estoppel.

Question 24

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

Question 25

A release is a contract in which one party forfeits the right to pursue a le?gal claim against another.

Question 26

The doctrine of promissory estoppel requires a clear and definite promise.

Question 27

A later promise to do what one already has a legal duty to do is legally suf?ficient consideration.

Question 28

A covenant not to sue is against public policy.

Question 29

A promise to pay for an act that has already occurred is enforceable.

Question 30

Promises to pay debts barred by a statute of limitations are not enforce?able due to the absence of consideration.

Question 31

Under the doctrine of promissory estoppel, every gratuitous promise is binding if the promisee changes position in reliance on the promise.

Question 32

An accord and satisfaction is used to discharge a liquidated debt.

Question 33

Any promise made with respect to a past event is enforceable because the event is cer?tain-it has already occurred.

Question 34

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

Question 35

In most states, a release requires a signed writing.

Question 36

Promissory estoppel requires reliance of a substantial and definite character.

Question 37

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

Question 38

An accord and satisfaction requires that the amount of a debt be certain.

Question 39

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

Question 40

A covenant not to sue is the substitution of a contractual obligation for a legal action.

Question 41

Axel, the owner of Bar-B-Q Café, announces that he plans to paint its front fluorescent red. Cleo, the owner of Delicate Dress Shop next door, promises to pay Axel $1,000 to use a more conservative color. Axel agrees. Cleo's promise is

A) enforceable, because Axel agreed to refrain from doing something that he was legally entitled to do.
B) enforceable, because Axel would resent Cleo if she never paid.
C) unenforceable, because Axel agreed to refrain from doing some?thing that he was legally entitled to do.
D) unenforceable, because Axel's color choice was offensive to Cleo.

Question 42

Baked Goods Company agrees to supply Comida Café with all the corn chips that it re?quires for a year. A sudden demand for ethanol results in a shortage of corn, and the price rises sharply. Baked Goods 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 43

Fact Pattern 12-A1
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 12-A1. Dave's discount is legally sufficient consid?eration

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 44

Rollo promises to perform, for a price, shoe repair services in affiliation with Togs 'n Things, a clothing store. To support a contract, the consid?eration ex?changed by the parties must be

A) adequately considerate.
B) equally valuable.
C) legally sufficient.
D) wisely priced.

Question 45

Superior-Plus Properties, Inc., and Topps Construction Company sign a contract that specifies the amount to be paid. Additional compensation may be jus?tified by

A) any business risks that occur 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 46

Fact Pattern 12-A2
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 12-A2. "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 47

Todos Ltd. agrees to supply United Steel, Inc., with minerals from Venezuela. When the gov?ern?ment is unexpectedly overthrown in a revolution, Todos can obtain the goods only at a much higher price. United agrees to pay but later files a suit to recover the difference. The court will most likely rule that

A) a change in government is a risk ordinarily assumed in business.
B) an unforeseen difficulty supported the contract modification here.
C) Todos engaged in extortion or the so-called holdup game.
D) Todos had a preexisting duty to supply the goods at the initial price.

Question 48

Jeff offers Kelly $1,000 for her three-year-old laptop computer. Kelly ac?cepts. 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 49

National Business Company and One-State Sales, Inc., agree to si?multa?neously rescind their contract and enter into a new agreement under which their duties are the same. National 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 50

Coverage, Inc. (CI), coordinates an insurance network that includes 1 million potential patients. By contracting with CI, a medical provider gains access to the network in exchange for accepting pay?ments at lower than market rates. Doctors, Inc., contracts with CI but, when few patients are forthcoming, files a suit to recover the differ?ence between the contract and market rates. The court will most likely rule that the contract is

A) enforceable because consideration is not required for this contract.
B) enforceable because the contract does not lack consideration.
C) not enforceable because Doctors received few patients.
D) not enforceable because the contract lacks consideration.

Question 51

Fact Pattern 12-A2
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 12-A2. A court is most likely to evaluate the adequacy of consid?era?tion 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 52

Fact Pattern 12-A3
Cut-Rate Construction Company 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 12-A3. If CCC offers, as a reason for the extra $100,000, that ordinary business expenses have increased, the agree?ment 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 53

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

Question 54

Fact Pattern 12-A2
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 12-A2. 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 55

Digital Computers (DC) agrees to sell 100 hard drives to Eagle Computer Stores. Later, to obtain a higher profit, DC demands an extra $100 per drive to complete delivery. With no other source for DC drives, Eagle reluctantly agrees. Regarding this agreement, a court would likely

A) enforce it.
B) rescind it.
C) order the parties to renegotiate it.
D) not enforce it.

Question 56

Fact Pattern 12-A1
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 12-A1. Eva's forbearance from towing is legally sufficient consid?eration

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 57

Fact Pattern 12-A3
Cut-Rate Construction Company 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 12-A3. 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 58

Applied Methods Corporation promises to give stock options to Brad, a production designer, for processes he has already designed. 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 59

Ida promises to pay Jon, her son, $15,000 if he obtains his degree at Kappa University, where he is currently in his second year. Jon graduates. Ida is

A) not required to pay, because Jon was already at Kappa.
B) not required to pay, because obtaining a degree benefits Jon.
C) required to pay, because a job can be hard to find after college.
D) required to pay, because Jon obtained a degree at Kappa.

Question 60

Quality Steel Corporation files a suit against Rite Tool Company, claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the considera?tion if

A) it is obvious that the consideration is adequate.
B) Rite Tool asserts that there is adequate consideration.
C) something of value passed between the parties.
D) the consideration is worth more than $100.

Question 61

Fact Pattern 12-B1
Sal contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract.
Refer to Fact Pattern 12-B1. The next day, Sal changes her mind and again 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 62

Fact Pattern 12-B1
Sal contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract.
Refer to Fact Pattern 12-B1. 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 63

Fact Pattern 12-B2
Dag and Enita are in an auto accident. Dag offers B $2,000 if Enita promises not to pursue her potential legal claim against Dag. Enita agrees. Later, Enita discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injury.
Refer to Fact Pattern 12-B2. 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 64

General Credit Corporation's promise to pay its employees a year-end bonus "if it seems like a good idea at the time" is

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

Question 65

Quinn promises to sell his recreational vehicle (RV) to Sid, who builds a structure behind his house in which to keep it. Quinn's later attempt to renege on the promise is

A) effective if Quinn did not ask Sid to build anything.
B) effective if Quinn wants to sell the RV to someone else.
C) not effective if Sid cannot obtain a similar RV for a similar price.
D) not effective if Sid detrimentally relied on Quinn's promise.

Question 66

Milo files a suit against National Corporation under the doctrine of prom?issory estoppel. Milo must show that

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

Question 67

Collection of EZ Sales Company's debt to First Storage Corporation is barred by a statute of limitations. A new promise by EZ to pay the debt

A) may become enforceable if payments are made.
B) must be in writing.
C) requires consideration.
D) will not revive the obligation.

Question 68

Speedy Assembly Company promises its employees a 10-percent raise at the end of the year if productivity has increased and management feels it is warranted. Speedy must

A) do nothing.
B) give the employees a 10-percent raise only at the end of the year.
C) give the employees a 10-percent raise only if produc?tivity increases.
D) give the employees a 10-percent raise under any circumstances.

Question 69

Carl pledges $1,000 to the Disaster Relief Organization (DRO). On the ba?sis of the pledge, DRO orders additional rescue equipment. Carl fails to pay. In DRO's suit, a court may enforce the pledge

A) according to the preexisting duty rule.
B) as an illusory promise supported by past consideration.
C) on a theory of accord and satisfaction.
D) under the doctrine of promissory estoppel.

Question 70

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 dis?charges 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 71

After an accident with a driver for General Transport Company (GTC), Paul signs a covenant not to sue GTC for damages in a tort action if it pays for the damage to his car. This covenant

A) bars recovery only if GTC pays.
B) is an illusory contract.
C) is barred by the preexisting duty rule.
D) is unconscionable.

Question 72

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

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

Question 73

MicroCorp hires Nick to work for one month at a weekly salary of $400. A MicroCorp representative orally agrees two weeks later to double Nick's salary. This agree?ment is

A) enforceable because an employment contract is an adhesion contract.
B) enforceable because the parties have executed an accord and satisfaction.
C) unenforceable because Nick has incurred no additional detriment in ex?change for MicroCorp's promise.
D) unenforceable because Nick's performance is uncertain.

Question 74

Betty pledges to donate $1,000 to the Children's Hospital. On the basis of the pledge, the hospital orders additional equipment. Betty reneges on the pledge. The hospital sues Betty. If the court enforces the pledge, it will be

A) because Betty's performance is uncertain.
B) because of the unforeseen difficulties.
C) because the pledge is a gift.
D) under the doctrine of promissory estoppel.

Question 75

Fact Pattern 12-B2
Dag and Enita are in an auto accident. Dag offers B $2,000 if Enita promises not to pursue her potential legal claim against Dag. Enita agrees. Later, Enita discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injury.
Refer to Fact Pattern 12-B2. 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 Enita.
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.

Question 76

Ann is injured in an accident caused by Bob. Bob agrees to pay Ann $2,500 if she agrees to release Bob from further liability. Ann agrees. If Ann's damages ultimately exceed $2,500, Ann can

A) collect the balance from Bob in a breach-of-contract suit.
B) collect the balance from Bob in a tort suit.
C) collect the balance from Bob on the ground of unforeseen difficulties.
D) not collect the balance from Bob.

Question 77

XL Retail Sales, Inc., promises its salaried employees a bonus at the end of the year if management thinks it is warranted. 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 78

Mary promises to pay her assistant Ned $10,000 in consideration of the ser?vices he provided over the years. Mary never pays Ned. Mary is

A) liable for payment of the $10,000.
B) liable only if Ned still works for Mary.
C) not liable, because the consideration is in the past.
D) not liable, because the consideration was unintentional.

Question 79

Fact Pattern 12-A3
Cut-Rate Construction Company 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 12-A3. If CCC offers, as a reason for the extra $100,000, that extraordinary unforeseen difficulties will add consid?erable 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 80

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.