Question 1

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

Accepted Answer

A) True 
 B)False  False

Question 2

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

Accepted Answer

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. B

Question 3

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

Accepted Answer

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. A

Question 4

In May, Rolf agrees to work for Soda Sales Company at $800 per week for a year beginning June 1. The following January, Tropical Beverages, Inc., offers Rolf the same work at $900 per week. Rolf tells Soda about the offer. Soda offers to enter into a new contract with Rolf at $875 per week. If Rolf agrees, is the new Soda contract enforce?able? Why or why not?

Accepted Answer

The answer of In May, Rolf agrees to work for...

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

A release does not require consideration to be legally binding.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

In most states, a release requires a signed writing.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

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

Question 10

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

Accepted Answer

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 11

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

Accepted Answer

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 12

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

Accepted Answer

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 13

Jill promises to pay Kyle $500 because "he does not have as much money as other people." Jill's promise is

Accepted Answer

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 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

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 16

If a promise is made, it will be enforced.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

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 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 12: Consideration

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

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

A release does not require consideration to be legally binding.

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

In most states, a release requires a signed writing.

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

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

Jill promises to pay Kyle $500 because "he does not have as much money as other people." Jill's promise is

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

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

If a promise is made, it will be enforced.

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

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

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