Deck 10: Consideration

Question 1

The element of bargained-for exchange distinguishes contracts from gifts.

Answer 1

False

Question 2

A promise made in return for an act or event that has yet taken place is unenforceable.

Answer 2

False

Question 3

Inadequate consideration always indicates undue influence.

Answer 3

False

Question 4

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

Question 5

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

Question 6

It is illegal for two parties to mutually agree to rescind a valid contract.

Question 7

A determination of whether consideration exists depends on a comparison of the values of the things exchanged.

Question 8

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

Question 9

A preexisting duty may arise from a previous contract.

Question 10

A promise by one party to pay another for refraining from an action that one has a legal right to undertake is enforceable.

Question 11

Consideration in bilateral contracts normally consists of a promise in return for a performance.

Question 12

Past consideration can be legally sufficient consideration.

Question 13

Forbearance is the act of refraining from doing something that one has a legal right to do.

Question 14

In general, courts consider the fairness of a contract when deciding if the contract is binding.

Question 15

Consideration is the value given in return for a promise.

Question 16

In contract law, the term consideration refers to the serious thought that underlies a party's intent to enter into a contract.

Question 17

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

Question 18

Rescission is the unmaking of a contract so as to return the parties to the positions they occupied before the contract was made.

Question 19

If, during the performance of a contract, extraordinary difficulties arise that were totally unforeseen at the time the contract was formed, a court may allow an exception to the preexisting duty rule.

Question 20

Adequacy of consideration refers to how much consideration is given.

Question 21

There can be no satisfaction unless there is first an accord.

Question 22

Statutes of limitations in all states require a debtor to pay a debt within a specified period of time.

Question 23

Even if the terms of a contract express such uncertainty of performance that the promisor has not definitely promised to do anything, the promise binds the promisor.

Question 24

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

Question 25

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

Question 26

A debtor who promises to pay a previous debt even though recovery is barred by a statute of limitations makes an enforceable promise.

Question 27

A covenant not to sue does not always bar further recovery.

Question 28

An illusory promise is an enforceable promise.

Question 29

Henry promises not to open his restaurant before 10:00
A) the destruction of a legal relationship.

A)m. if Suzy, who owns a bakery next door to him, promises to close her bakery by 4:00 p.m. Henry's consideration is
B) the creation of a legal relationship.
C) a forbearance.
D) an exchange of money.

Question 30

In many states, a release contract must be in a signed writing.

Question 31

A release does not require consideration to be legally binding.

Question 32

For accord and satisfaction to occur, the amount of the debt cannot be in dispute.

Question 33

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 34

Aron questions whether there is consideration for his contract with Banquet Hall to exchange his musical performance of country tunes at select social events for Banquet's payment of a certain amount. To constitute consideration, the value of whatever is exchanged must be

A) objectively worthy.
B) precisely adequate.
C) legally sufficient.
D) practically sound.

Question 35

Under the doctrine of promissory estoppel, a promise will not be enforced unless it is supported by consideration.

Question 36

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

Question 37

Kingston promises to pay Melina $500 to install a sump pump in his warehouse. Melina com?pletes the installation. The act of installing the pump

A) imposes a moral obligation on Kingston to pay Melina.
B) imposes no obligation on Kingston unless he is satisfied with the job.
C) is not sufficient consideration because it is not goods or money.
D) is the consideration that creates Kingston's obligation to pay Melina.

Question 38

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

Question 39

A covenant not to sue is against public policy.

Question 40

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

Question 41

Industrial Engineering, Inc., promises to give stock options to Jasmine for processes she has already designed for the firm. This promise is enforceable

A) because it is a new contract.
B) because it is an illusory promise.
C) because it is supported by past consideration.
D) under no circumstances.

Question 42

Fact Pattern 10-3
Sally 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 10-3. Sally 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 43

Frisco offers to buy a Gibson guitar owned by Hayden for twice what she paid for it. She accepts and hands the guitar to Frisco. Her delivery of the guitar is

A) not consideration because her voluntary consent may be lacking.
B) not consideration because the exchange is not a bargain.
C) consideration.
D) not consideration because the value is not legally sufficient.

Question 44

Mobile Media Company contracts to hire Nada for one year at $35 per hour, reserving the right to cancel the contract at any time after Nada begins performance by giving two weeks' notice. This promise is

A) an enforceable contract.
B) an illusory promise.
C) an option-to-cancel clause.
D) a requirement contract.

Question 45

Fact Pattern 10-2
Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay.
Refer to Fact Pattern 10-2. If Teatro says it is asking for the extra $250,000 because ordinary business expenses have increased, the agree?ment is

A) enforceable as the consideration is past.
B) enforceable because of unforeseen difficulties.
C) unenforceable as an illusory promise.
D) unenforceable due to the preexisting duty rule.

Question 46

Fact Pattern 10-2
Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay.
Refer to Fact Pattern 10-2. If Teatro says it is asking for the extra $250,000 because it has encountered extraordinary unforeseen difficulties that will add consid?erable cost to the project, the agreement is

A) enforceable as the consideration is past.
B) enforceable because of unforeseen difficulties.
C) unenforceable as an illusory promise.
D) unenforceable due to the preexisting duty rule.

Question 47

Mariah promises to pay her assistant Nadine $10,000 in consideration of the ser?vices she provided over the years. Mariah never pays Nadine. Mariah is

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

Question 48

Mobile Minutes Company offers Nate an unlimited number of monthly phone minutes for $4.50 per month. Nate ac?cepts. If a dispute arises, a court would likely

A) enforce the deal after questioning the adequacy of the consideration.
B) not question the adequacy of the consideration.
C) rewrite the deal after questioning the adequacy of the consideration.
D) set aside the deal after questioning the adequacy of the consideration.

Question 49

Fact Pattern 10-1
Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deal-a mortgage loan secured by Bridey's purchase of a house-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 10-1. The court is most likely to evaluate the adequacy of consid?era?tion if

A) one of the parties claims that they entered into an unwise contract.
B) something exchanged is not of direct economic or financial value.
C) the items exchanged are of unequal value.
D) there is a large disparity in the amount or value of the consideration exchanged.

Question 50

Under a contract with Valley Vineyard, Walsh begins grading a terraced hillside for the planting of grapes. Halfway through the project, Walsh asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." Valley agrees but later refuses to pay. Their agreement is

A) unenforceable because Walsh's performance was a preexisting duty.
B) unenforceable because Valley's promise was illusory.
C) enforceable.
D) unenforceable because Walsh's request modified the contract.

Question 51

Fact Pattern 10-3
Sally 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 10-3. The next day, Sally changes her mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sally 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 52

Quentin questions whether there is consideration for his contract with Rainey to exchange his performance with the Symphonic Saxophone Sextet for her payment of a certain amount. To constitute consideration, there must be

A) a payment.
B) a performance.
C) a bargained-for exchange.
D) serious thought underlying each party's intent to contract.

Question 53

Dave's uncle tells Dave that if "he feels that Dave deserves it," he will give Dave $1,000 when Dave graduates from college. Dave's uncle's promise is

A) illusory.
B) enforceable.
C) a forbearance.
D) a preexisting duty.

Question 54

Produce Packaging Company promises its employees a 10 percent raise at the end of the year if productivity has increased and management feels the raise is warranted. Produce Packaging 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 55

Sully signs a contract to borrow $200,000 from Riverside Bank to buy a house. In the contract, Sully agrees to pay a certain rate of interest on the amount of borrowed funds at monthly intervals for thirty years. This debt is

A) an illusory promise.
B) liquidated.
C) past consideration.
D) unliquidated.

Question 56

Fact Pattern 10-1
Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deal-a mortgage loan secured by Bridey's purchase of a house-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 10-1. "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 57

Fact Pattern 10-1
Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deal-a mortgage loan secured by Bridey's purchase of a house-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 10-1. If, as Bridey claims, the consideration for this contract is inadequate, it may indicate a lack of

A) market value for Bridey's house.
B) voluntary consent to the contract on Bridey's part.
C) appraisal by a third party on behalf of Continental.
D) standards for the granting of credit on Continental's part.

Question 58

Valley Paragliders Association files a suit against Wing Designers, Inc., claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the considera?tion if

A) there is a large disparity in the amount of consideration exchanged.
B) the consideration involves the performance of services.
C) something of value passed between the parties.
D) the consideration is worth less than $100.

Question 59

Sparky offers Teodora $1,000 for her collection of rare coins. She 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 60

Fact Pattern 10-2
Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay.
Refer to Fact Pattern 10-2. If Teatro offers no reason for the extra $250,000, but says only that it will stop work if it is not paid, the agreement is

A) enforceable as the consideration is past.
B) enforceable because of unforeseen difficulties.
C) unenforceable as an illusory promise.
D) unenforceable due to the preexisting duty rule.

Question 61

Marketing Solutions Inc. promises to employ Niki as a software engineer. In reliance on the promise, Niki quits her job with Online Ad Company, but Marketing Solutions does not hire her. Most likely, Marketing Solutions is

A) liable to Niki under the concept of accord and satisfaction.
B) liable to Niki under the doctrine of promissory estoppel.
C) liable to Niki under the preexisting duty rule.
D) not liable to Niki.

Question 62

Apple & Pear Orchards contracts to hire Brigit for one year to tend the fruit in its commercial orchards but reserves the right to cancel the employment on thirty days' notice at any time after Brigit begins work. This promise is

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

Question 63

Rudy files a suit against Shakes & Shingles, Roofing Contractor, Inc., under the doctrine of prom?issory estoppel. Rudy must show that

A) he justifiably refused to fulfill a promise to Shakes & Shingles.
B) he justifiably relied on Shakes & Shingles' promise to his detriment.
C) Shakes & Shingles justifiably refused to fulfill a promise to him.
D) Shakes & Shingles justifiably relied on his promise to its detriment.

Question 64

Lea signs a contract with Metro Business Loans, Inc., to borrow $25,000 to remodel Lea's Hair Care Salon. Lea does not repay the loan. Metro fails to sue within the time prescribed by the applicable statute of limitations. Later Lea promises to pay the debt. To be enforceable, this promise needs

A) bargained-for consideration.
B) no consideration.
C) legally sufficient consideration.
D) adequate consideration.

Question 65

Centre City Properties, Inc., owns and manages a warehouse. DIY Home Improvement Stores agrees to lease the warehouse for six years. Under the lease, DIY is obligated to pay all of the utility costs. Two years into the term, DIY asks Centre City to modify the lease to provide that the utility costs will be split equally between them. The landlord agrees, but later decides it does not want to share the costs and refuses to pay. Is Centre City bound to its agreement to share the utility costs? Why or why not?

Question 66

Claudia pledges to donate $10,000 to Disaster Relief & Recovery Inc. (DR&R). On the basis of the pledge, DR&R orders additional supplies. If Claudia does not fulfill the pledge, a court may enforce it

A) under the preexisting duty rule.
B) on the basis of unforeseen difficulties.
C) as a requirement contract.
D) under the doctrine of promissory estoppel.

Question 67

Qiana writes a check to Payday Loans, Inc., in an amount that represents half of her debt to the lender. On the back of the check, Qiana includes the words "payment in full." Payday agrees to accept the lesser sum and 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 68

Gustaf and Hilltop Country Club disagree as to the exact amount Hilltop owes Gustaf for his landscaping work. 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 69

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

A) the balance from Gentry in a breach-of-contract suit.
B) the balance from Gentry in a tort suit.
C) the balance from Gentry on the ground of unforeseen difficulties.
D) nothing more from Gentry.

Question 70

Chris promises Dina $40,000 if she graduates from Eagle College. Dina enrolls in Eagle, attends full-time for four years, and graduates. When Dina asks Chris for $40,000, Chris says, "I don't re?member promising you $40,000. But if there was a promise, it's not en?forceable, because we didn't bargain for it. And even if there was a prom?ise that would other?wise be enforceable, I revoke it now." Can Dina en?force Chris's "prom?ise"? Why or why not?

Question 71

Twyla's dock is damaged in an accident caused by Ulric's negligence. Twyla agrees not to sue him if he will pay for the damage. If Ulric fails to pay, Twyla can bring an action for breach of contract. This agreement is

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

Question 72

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

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