Question 1

Contracts generally do not require bargaining that leads to an exchange between the parties.

Accepted Answer

A) True 
 B)False  False

Question 2

Upon graduating from college,Kathy announced her plans to enter law school the following fall and to marry Rick in December.Kathy's father was afraid that marriage during her first year in law school might cause her to fall behind in her studies or cause her to drop out of school.He called Kathy and promised her $10,000 if she postponed her wedding until after completion of her first year of law school.Kathy agreed and postponed the wedding for a year.Kathy successfully completed her first year of law school,but soon thereafter,Kathy's father died.The administrator of her father's estate claimed she was not entitled to the $10,000 because there was no consideration for her father's promise.If Kathy sues the estate,she will probably be:

Accepted Answer

A)   unsuccessful because her father's death terminated the contract.
B)   successful, as there was consideration.
C)   unsuccessful because her father received no benefit.
D)   unsuccessful because it was merely fatherly advice not to get married during the first year of law school. B

Question 3

Shelby hired Evan to drill a well on her property for $3,000.They both thought the soil and subsoil were normal for the area,but after he started drilling,Evan found a layer of rock that required him to purchase a special drill and required an extra ten hours of work.Evan demanded an extra $1,000 to complete the job.Discuss whether Shelby is liable for the additional $1,000.

Accepted Answer

The general rule is that a promise to do something the promisor is already obligaed to do is not consideration.Therefore,under the general rule Shelby would not be liable for the extra $1,000,since Evan was already obligated to drill the well for $3,000.However,under an exception to the general rule,when unforeseen circumstances cause a party to make a promise regarding an unfinished project,that promise is generally valid consideration.Even though Evan was only promising to finish what he was already obligated to do,his promise to finish the well was valid consideration because neither he nor Shelby knew of the rock and he faced a situation quite different from what the parties anticipated when they entered into the contract.

Question 4

Police Officer Paul apprehends a wanted criminal and then demands the $10,000 reward offered by Crime Stoppers.Which of the following statements is true?

Accepted Answer

A)   Police Officer Paul is not entitled to the reward because past consideration is never valid consideration.
B)   Police Officer Paul is entitled to the reward because he puts his life on the line every day.
C)   Police Officer Paul is not entitled to the reward because he was under a pre-existing duty to make the arrest.
D)   Police Officer Paul is not entitled to the reward but may have an argument under promissory estoppel.

Question 5

"I'll sell you my car if I decide to sell it" is an example of:

Accepted Answer

A)   a conditional offer.
B)   an unliquidated offer.
C)   a unilateral contract.
D)   an illusory promise.

Question 6

Boris sky dives out of a plane and gets hung up in a tree,hopelessly suspended and swinging precariously in his parachute from the branches of the tree.Natasha sees that he is in trouble and comes to his rescue.Once Boris is safely on the ground,he gratefully promises to give Natasha half of his life savings.When he changes his mind,Natasha will probably be unsuccessful in enforcing his promise.

Accepted Answer

A) True 
 B)False

Question 7

Frank's Furniture Company promised in a written agreement to purchase as much walnut wood "as it desires" from Forestry Products,Inc.If Frank's purchased walnut wood from another source and Forestry Products sued,what is the likely result?

Accepted Answer

The answer of Frank's Furniture Company promised in a written...

Question 8

Bailey Co.and Spryt Bros.enter into a contract for the manufacture and sale of 400 lawn chairs.If both parties agree that a modification is necessary:

Accepted Answer

A)   the surest way to modify the contract is to liquidate it.
B)   they may not do so without court supervision.
C)   an agreement to rescind the contract will terminate the contractual rights of Bailey Co. and Spryt Bros. if neither of them had completed their obligations.
D)   courts will generally not enforce a cancellation and modification of a contract unless one party received inadequate consideration under the original contract.

Question 9

In January,Alex promised to pay Y-K Inc.$5,000 if it would refrain from filing suit against him on a breach of contract action.Y-K agreed and accepted a $5,000 check from Alex.Which of the following statements is correct?

Accepted Answer

A)   Y-K's promise to refrain from suing Alex was not supported by legal consideration.
B)   Y-K's promise to refrain from suing Alex was supported by legal consideration and is enforceable.
C)   This is an accord and satisfaction, and Y-K cannot sue.
D)   The courts would apply promissory estoppel in this situation.

Question 10

Courts enforce all promises in the interests of simple morality.

Accepted Answer

A) True 
 B)False

Question 11

Billy owes a liquidated debt of $3000 to Rayna,his personal weight trainer.Billy sends Rayna a check for $300 on which he has marked,"Payment in Full." If Rayna cashes the check she will not be able to successfully sue Billy for the remainder of the debt.

Accepted Answer

A) True 
 B)False

Question 12

What phrase explains how a requirements contract can be valid?

Accepted Answer

A)   "will buy 100 percent of output"
B)   "willing to accept the entire quantity"
C)   "no consideration needed"
D)   "in good faith"

Question 13

Raul agrees to paint Mike's house for $1,000.Before finishing,Raul states it is too hot to finish,and Mike offers to pay $1,200 if Raul finishes.Mike's statement that he will pay $1,200 is unenforceable.

Accepted Answer

A) True 
 B)False

Question 14

Under the Uniform Commercial Code,an agreement modifying a contract:

Accepted Answer

A)   always requires consideration.
B)   requires consideration only when the sale of goods is involved.
C)   may not require consideration.
D)   requires consideration only when one of the parties is incompetent.

Question 15

Zero,Inc.agreed to build Millie a storage building for $8,000.After beginning the project,Zero realized that it could not complete the job and make a profit.Zero demanded $9,500 to complete the building.Millie agreed to pay the $9,500.When the project was complete,Millie tendered $8,000 to Zero for the job.If Zero sues Millie for the remaining $1,500:

Accepted Answer

A)   Zero will win because there was consideration for the additional $1,500.
B)   Zero will win because Millie had a pre-existing duty to pay any additional amounts.
C)   Zero will lose because there was no legal consideration to support the additional $1,500.
D)   Zero will lose because the UCC does not require consideration to modify an existing contract.

Question 16

If Crosby and Dash are in disagreement as to the exact amount of money that Crosby owes Dash,then they may choose to form a new agreement at a set amount.If they both perform the new agreement,their conduct would be an example of:

Accepted Answer

A)   a rescission.
B)   a contract modification.
C)   a preexisting duty.
D)   an accord and satisfaction.

Question 17

Consideration can be a promise or an act.

Accepted Answer

A) True 
 B)False

Question 18

An agreement to pay a lesser amount to settle an unliquidated debt is:

Accepted Answer

A)   enforceable, as there is consideration.
B)   unenforceable, as there is no consideration.
C)   enforceable in only some states.
D)   unenforceable as a violation of public policy.

Question 19

A promise by Derkin Restaurants to buy all of the produce it needs this next year at an established price from Elfredo's Produce would be an:

Accepted Answer

A)   enforceable requirements contract.
B)   enforceable output contract.
C)   unenforceable, illusory contract.
D)   unenforceable promise based on past consideration.

Question 20

In the historic case of Hamer v.Sidway,the nephew:

Accepted Answer

A)   lost, as there was no consideration.
B)   lost, as the uncle was dead.
C)   won, as there was consideration.
D)   won, as there was a completed gift.

Exam 12: Consideration

Contracts generally do not require bargaining that leads to an exchange between the parties.

Police Officer Paul apprehends a wanted criminal and then demands the $10,000 reward offered by Crime Stoppers.Which of the following statements is true?

"I'll sell you my car if I decide to sell it" is an example of:

Frank's Furniture Company promised in a written agreement to purchase as much walnut wood "as it desires" from Forestry Products,Inc.If Frank's purchased walnut wood from another source and Forestry Products sued,what is the likely result?

Bailey Co.and Spryt Bros.enter into a contract for the manufacture and sale of 400 lawn chairs.If both parties agree that a modification is necessary:

In January,Alex promised to pay Y-K Inc.$5,000 if it would refrain from filing suit against him on a breach of contract action.Y-K agreed and accepted a $5,000 check from Alex.Which of the following statements is correct?

Courts enforce all promises in the interests of simple morality.

Billy owes a liquidated debt of $3000 to Rayna,his personal weight trainer.Billy sends Rayna a check for $300 on which he has marked,"Payment in Full." If Rayna cashes the check she will not be able to successfully sue Billy for the remainder of the debt.

What phrase explains how a requirements contract can be valid?

Raul agrees to paint Mike's house for $1,000.Before finishing,Raul states it is too hot to finish,and Mike offers to pay $1,200 if Raul finishes.Mike's statement that he will pay $1,200 is unenforceable.

Under the Uniform Commercial Code,an agreement modifying a contract:

If Crosby and Dash are in disagreement as to the exact amount of money that Crosby owes Dash,then they may choose to form a new agreement at a set amount.If they both perform the new agreement,their conduct would be an example of:

Consideration can be a promise or an act.

An agreement to pay a lesser amount to settle an unliquidated debt is:

A promise by Derkin Restaurants to buy all of the produce it needs this next year at an established price from Elfredo's Produce would be an:

In the historic case of Hamer v.Sidway,the nephew: