Deck 15: Consideration

Question 1

Reasonable reliance on a promise is the only requirement for promissory estoppel to apply.

Answer 1

False

Question 2

When determining whether consideration is sufficient to support a contract for the sale of goods under the UCC, one relevant factor is whether both parties received a good deal under UCC rules and principles.

Answer 2

False

Question 3

Barbara promises to stop running her dog grooming business. This is not valid consideration.

Answer 3

False

Question 4

In a bilateral contract, consideration for a promise is a return promise.

Question 5

"Because you have worked so hard this year, I will give you a $2,500 Christmas bonus" would be consideration to support a contract.

Question 6

When a debt is liquidated, the parties may enter into an accord and satisfaction.

Question 7

A promise to do something that you are already obligated to do is generally a valid consideration.

Question 8

Gabrielle is three months behind on her mortgage, and her lender filed negative information affecting her credit rating. Gabrielle mailed one monthly payment to the lender along with a letter stating that she was making the payment on the condition that the lender remove negative material sent to credit reporting agencies affecting her credit rating. The lender cashed the check but did not remove the negative information. Gabrielle sues the bank for breach of contract. Which of the following is the most likely result?

A) The bank will win because under the preexisting duty rule, Gabrielle was already legally obligated to make the payment, and there was no consideration to support the contract.
B) The bank will win because under federal law, once correct negative information is reported regarding a customer, it can be removed only if it is found to be untruthful.
C) The bank will win because under state law, once correct negative information is reported regarding a customer, it can be removed only if it is found to be untruthful.
D) Gabrielle will win because the bank's cashing the check constituted acceptance of her offer, and a valid contract existed.
E) Gabrielle will win because the bank had an obligation to notify her that it was not accepting her offer before cashing the check.

Question 9

Which of the following was the result on appeal in the Case Opener involving the alleged breach of an oral contract based on the plaintiff lawyer loaning a corporate client funds and the client later reneging on a promise, made in gratitude, to give the lawyer three percent of the company's stock?

A) That the promise to transfer the stock flowed from the loan transaction and was enforceable by the plaintiff.
B) That the promise was unenforceable because lawyers may not loan clients money.
C) That the promise was enforceable only if the total the plaintiff received in funds did not violate state usury laws involving maximum interest rates.
D) That the promise was not enforceable because it was a gift.
E) That the promise was enforceable as a gift.

Question 10

In an unliquidated debt, the parties agree on whether money is owed and agree upon the amount but disagree on the repayment schedule.

Question 11

Promissory estoppel is an exception to the rule requiring consideration.

Question 12

A detriment to a promisor is a type of consideration.

Question 13

Consideration is optional in every unilateral contract.

Question 14

Which of the following was the result on appeal in Thelma Agnes Smith v. David Phillip Riley, the case in the text in which the plaintiff who had lived with the defendant out of wedlock for several years sought to enforce two agreements regarding the sale and assignment of property to her after the couple broke up?

A) The court ruled in favor of the defendant on the basis that a recitation of nominal consideration of $1 along with love and affection was insufficient consideration to support a conveyance.
B) The court ruled in favor of the plaintiff on the basis that a recitation of nominal consideration of $1 along with consideration of love and affection was adequate consideration to support the agreements.
C) The court ruled in favor of the defendant on the basis that the plaintiff's previous deposit of funds into a joint checking account was insufficient consideration for the later agreements.
D) The court ruled in favor of the plaintiff on the basis that the plaintiff's previous deposit of funds into a joint checking account was sufficient consideration for the later agreements.
E) The court ordered the parties to divide on a 50/50 basis the assets in question based on their domestic partnership.

Question 15

Past consideration generally qualifies as consideration.

Question 16

Which of the following was the judge's ruling in Jamil Blackmon v. Allen Iverson, the case in the text in which the plaintiff alleged that the defendant, a professional athlete, wrongfully failed to pay him a percentage of proceeds received from using the nickname "The Answer" in merchandising although the defendant agreed to do so after the plaintiff suggested the use of the nickname?

A) That consideration was lacking because the defendant was not bound to use the nickname.
B) That the defendant's promise to pay was past consideration insufficient to create a binding contract.
C) That consideration was present and that the defendant was liable to the plaintiff.
D) That the issue of consideration was irrelevant because consideration was not required in this type of contract.
E) That the defendant was required to pay the plaintiff only half of the percentage initially offered because a gift situation was involved.

Question 17

________ is what a person receives in return for performing a contract obligation.

A) Consideration
B) Accent
C) Accord
D) Money
E) Accession

Question 18

An illusory promise can constitute consideration in some contracts.

Question 19

Partial payment of a debt is never valid consideration.

Question 20

The court will never look at adequacy of consideration as long as at least one party has given some detriment.

Question 21

A store indicates to a produce seller, "If you ship me those oranges by Friday, I will consider making you my sole supplier." This agreement is:

A) enforceable because of past consideration.
B) enforceable because it is a preexisting duty.
C) unenforceable because of past consideration.
D) unenforceable because of an illusory promise.
E) unenforceable under promissory estoppel.

Question 22

Which statement is true regarding illusory promises?

A) Illusory promises are not consideration.
B) Illusory promises are consideration.
C) Illusory promises qualify as consideration only when past consideration is at issue.
D) Illusory promises qualify as consideration only when promissory estoppel is at issue.
E) Illusory promises are consideration only when a sale of goods is involved.

Question 23

Timmons promise to pay Carl $500 to come to his house to fix his computer's hard drive that crashed. Carl comes over and fixes the hard drive. This is what type of a contract?

A) A unilateral contract
B) A bilateral contract
C) An implied contract
D) A contract not supported by consideration
E) An invalid contract

Question 24

Which of the following is an example of a situation where the court will consider adequacy of consideration?

A) When someone purchases a TV for $500 and later discovers it is worth less than $100.
B) When someone purchases a car which is later subject to a manufacturer recall.
C) When someone purchases a house and discovers later that property values in the neighborhood are falling.
D) When someone divests himself of all his assets for a very small amount of money and then declares bankruptcy.
E) The court never considers adequacy of consideration.

Question 25

Sameer promises his uncle, Farouk, that he will study every day and earn straight A's during the spring semester in exchange for having his tuition paid for the fall semester. Farouk agrees, but after Sameer studies all semester and receives straight A's, Farouk refuses to pay, saying that no such contract ever existed. Which of the following is true?

A) Consideration was present, there was an enforceable contract, and Farouk has wrongfully refused to pay.
B) There was no consideration present, and Farouk has no obligation to pay.
C) There was no consideration present, but Farouk must pay under principles of promissory estoppel.
D) There was consideration present, but Farouk is not required to pay because the contract was illusory.
E) There was consideration present, but Farouk is not required to pay because he did not receive a benefit personally.

Question 26

To be valid, consideration must ________

A) be the product of a bargained-for exchange.
B) be part of an equal exchange.
C) involve performance in exchange for a promise.
D) involve a mutual exchange of promises.
E) be money or a good.

Question 27

In a(n) ________, the consideration for each promise is a return promise.

A) unilateral contract
B) bilateral contract
C) acknowledgement
D) promise
E) promissory estoppel

Question 28

Which of the following is true of consideration?

A) Consideration is not required in bilateral contracts
B) Consideration is not required in unilateral contracts
C) Consideration is required in all contracts
D) Consideration is never required
E) Consideration is valid only if it is part of an equal exchange

Question 29

What are two exceptions to the rule requiring consideration?

A) A bilateral contract and a unilateral contract.
B) Promissory estoppel and an illusory contract.
C) A contract under seal and promissory estoppel.
D) A contract under seal and an illusory contract.
E) A contract under seal and a contract involving a liquidated debt.

Question 30

When does a court weigh the adequacy of consideration?

A) A court always looks at adequacy of consideration in a contract.
B) A court never looks at adequacy of consideration in a contract.
C) A court will look at adequacy of consideration if fraud or undue influence took place.
D) A court looks at adequacy of consideration if it believes that the bargain a person made was not a good bargain.
E) A court will look at adequacy of consideration only when a piece of property is involved.

Question 31

Why is there no consideration when a party does what it is already legally obligated to do?

A) Because there will not be adequate consideration.
B) Because promising to do something you are obligated to do is an illusory promise.
C) Because of the legal doctrine of promissory estoppel.
D) Because there is no detriment.

Question 32

When will the court consider adequacy of consideration?

A) Never.
B) If the court believes fraud or undue influence occurred.
C) If the plaintiff petitions the court to consider adequacy of consideration.
D) If the defendant petitions the court to consider adequacy of consideration.
E) In every breach of contract case.

Question 33

In a unilateral contract, the consideration for a promise is a[n] ________.

A) Action
B) Return promise
C) Acknowledgement
D) Consideration
E) Agreement

Question 34

Which of the following is an exception to the rule requiring consideration?

A) Promissory agreement
B) Promissory estoppel
C) Quasi estoppel
D) Quasi agreement
E) Promissory performance

Question 35

Carrie promises Tim she will clean his house and in exchange, Tim promises to pay Carrie $50. This is an example of what type of contract?

A) A unilateral contract
B) A bilateral contract
C) An implied contract
D) A contract created through promissory estoppel
E) An invalid contract

Question 36

Which statement is true regarding the adequacy of consideration?

A) Courts generally consider the adequacy of consideration in determining whether to enforce a contract.
B) Courts consider the adequacy of consideration only if something is sold for less than 90% of its market value.
C) Courts consider the adequacy of consideration only if something is sold for less than 80% of its market value.
D) Courts consider the adequacy of consideration only if something is sold for less than 70% of its market value.
E) Courts seldom consider the adequacy of consideration but will do so if fraud is involved.

Question 37

Which of the following is not a type of consideration?

A) A benefit to the promisee.
B) A detriment to the promisor.
C) A promise to do something.
D) A promise to refrain from doing something.
E) A promise to think about refraining from doing something.

Question 38

What must you prove in a successful promissory estoppel case?

A) Reasonable reliance on a promise to your detriment.
B) The exchange of adequate consideration.
C) The existence of consideration.
D) Intent of both parties to enter into a legally binding agreement.
E) The mutual exchange of promises.

Question 39

Tyler and Laura are arguing over the key difference between a bilateral and a unilateral contract. The key difference in these two types of contracts is ________.

A) the type of consideration.
B) a bilateral contract requires consideration and a unilateral does not.
C) a unilateral contract requires consideration and a bilateral does not.
D) the adequacy of consideration.
E) promissory estoppel must be present in a unilateral contract.

Question 40

Jeremy promises Gillian a job if she moves to California for the job. Gillian, excited for the new job, quits her current job and moves across the country to California in reliance on Jeremy's promise of the new job. Jeremy, however, tells Gillian once she gets to California, he has no job for her. Which doctrine might Gillian use to sue Jeremy?

A) Unjust agreement
B) Promissory estoppel
C) Quasi contract
D) Equitable estoppel
E) Promissory enforcement

Question 41

Jack offers Selena his bicycle for $75. Which of the following is an example of an illusory promise on Selena's part?

A) "I'll take it."
B) "I'll take it if I decide to do so."
C) "I won't pay $75, but I will pay $50."
D) "I'll take it if you will let me try it out first and the brakes work well."
E) "I'll take it if you will buy new tires."

Question 42

If a check is marked "paid in full," which of the following is true under the UCC?

A) If a business inadvertently cashes such a check, the business has 30 days from the date it cashed that check to offer repayment in the same amount to the debtor to avoid an accord and satisfaction.
B) If a business inadvertently cashes such a check, the business has 60 days from the date it cashed that check to offer repayment in the same amount to the debtor to avoid an accord and satisfaction.
C) If a business inadvertently cashes such a check, the business has 90 days from the date it cashed that check to offer repayment in the same amount to the debtor to avoid an accord and satisfaction.
D) If a business inadvertently cashes such a check, the business has 120 days from the date it cashed that check to offer repayment in the same amount to the debtor to avoid an accord and satisfaction.
E) The business has no recourse, and the debt is deemed discharged and satisfied.

Question 43

Bailey agrees to bathe and groom Keiko's dog, Fluffy, for $30. Bailey agreed to the price prior to seeing Fluffy, who is a large dog with lots of hair. Bailey tells Keiko that if she is going to groom Fluffy, the price will be $40. Keiko reluctantly agrees but tells Bailey that she should not have been surprised that a dog named Fluffy would have lots of hair. Bailey bathes and grooms Fluffy, but Keiko only pays her $30. Which of the following is correct regarding Bailey's entitlement to the extra $10?

A) Bailey is entitled to the extra $10 because a valid bilateral contract existed.
B) Bailey is entitled to the extra $10 because a valid unilateral contract existed.
C) Assuming the unforeseen circumstances rule does not apply, Bailey is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy for $30.
D) Assuming the unforeseen circumstances rule does not apply, Bailey is not entitled to the extra $10 because Keiko's promise to pay $30 was illusory.
E) Assuming the unforeseen circumstances rule does not apply, Bailey is not entitled to the extra $10 because past consideration was involved.

Question 44

Ronaldo says to Becky "I would like to make you my full-time business law tutor." Becky responds that she will think about it and let him know after she talks to Barry who also asked her to be a business law tutor. This is an example of:

A) a valid contract
B) an illusory promise
C) past consideration
D) a preexisting duty
E) detrimental reliance on Ronaldo's part

Question 45

Sonia goes to have her hair trimmed and agrees to pay $40 to the stylist. While there, Sonia decides that she would also like highlights. The stylist informs her that highlights will cost an additional $30. Sonia agrees to the price, gets the highlights, but refuses to pay the extra amount. What is the likely result in a dispute between Sonia and the stylist and why?

A) The stylist will win because she did additional work in exchange for the extra payment; and, therefore, Sonia's promise was supported by valid consideration.
B) The stylist will win because she did additional work in exchange for the extra payment; and, therefore, a valid unilateral contract existed.
C) The stylist will win unless Sonia can show that she had previously received both a trim and highlights for $40. If she can prove that she previously received both for $40, then the past expectations rule applies.
D) Sonia will win because the stylist had a preexisting duty to have Sonia's hair look as good as possible.
E) Sonia will win because there was no valid consideration in exchange for the highlighting.

Question 46

Which of the following is true regarding the preexisting duty rule?

A) Unforeseen circumstances are an exception, but additional work and past consideration are not exceptions.
B) Additional work is an exception, but unforeseen circumstances and past consideration are not exceptions.
C) Past consideration is an exception, but unforeseen circumstances and additional work are not exceptions.
D) Unforeseen circumstances and additional work are exceptions, but past consideration is not an exception.
E) Unforeseen circumstances and past consideration are exceptions, but additional work is not an exception.

Question 47

Which of the following is NOT an example of the exception to the rule regarding liquidated debt?

A) A car owner offers her car to the bank as full settlement of the remaining balance owed on the loan and the bank accepts.
B) A student offers the use of his picture in a school brochure in full settlement of the $100 debt he owes to the university bookstore and the school accepts.
C) A debtor disputes the amount of money that is owed, so the debtor pays half of the debt and the creditor cashes the check.
D) A debtor offers a credit card company a rare book in full settlement of a $3,000 debt and the credit card company accepts.
E) None of the above choices are correct, since there are no exceptions to the rule regarding liquidated debt.

Question 48

Every year, the World Bank gives over 181 countries a rating on the ease of doing business within the country. This is based on aggregate distance to frontier scores on 10 topics. Where does China generally fall in the "Enforcing Contracts" topic ranking?

A) The bottom 10.
B) Near the middle.
C) In the top 25.
D) The top 10.
E) China is ranked last.

Question 49

Which of the following is true regarding an accord and satisfaction?

A) When amounts agreed upon are paid, the debt is fully discharged.
B) When amounts agreed upon are paid, the debt is fully discharged except for any late charges due on the initial indebtedness.
C) When amounts agreed upon are paid, the debt is fully discharged except for any interest due on the initial indebtedness.
D) When amounts agreed upon are paid, the debt is fully discharged except for any late charges and for any interest due on the initial indebtedness.
E) When amounts agreed upon are paid, the debt is fully discharged except for any late charges or interest due on the initial indebtedness, or attorney fees of the creditor that are due.

Question 50

Loren and Izra's contract is in dispute. Loren makes an offer to accept less money than the parties agreed on and Izra pays the new amount. Loren and Izra have completed a(n) ________.

A) satisfactory past consideration contract
B) detrimental reliance contract
C) accord and satisfaction
D) compliance agreement
E) acknowledged change order

Question 51

When are promises based on past consideration enforceable?

A) Never
B) When enforcement is necessary to avoid injustice
C) When an illusory promise is made
D) When a sale of goods is involved
E) Always

Question 52

What can a business do to protect itself from a debtor's attempt to create an accord and satisfaction by sending the creditor a check with "paid in full" written on it?

A) Nothing. Businesses must carefully review every check to avoid inadvertently creating an accord and satisfaction.
B) Issue only liquidated debts to debtors and include provisions in credit card statements prohibiting the issuance of unliquidated debt.
C) Rely on the doctrine of promissory estoppel to ensure such checks are not valid.
D) Notify debtors that any attempt to settle a claim for less than the amount owed must be sent to a particular address and/or a particular person.
E) Sue the debtor for the remaining balance and argue there was insufficient consideration because there was no bargained-for exchange when the check was sent "Paid in Full."

Question 53

Genny and Luke contract for Luke to build a home for Genny. Luke promises to build the house for $100,000 but a neighboring forest fire destroys the framing during construction. Luke must reframe the house. Does the preexisting duty rule prevent Luke from enforcing a contract in which he charges additional money to Genny?

A) Yes, because he has a preexisting duty to build the house and took the chance of an issue during the building process.
B) Yes, because there are no exceptions to the preexisting duty rule, especially in contracts for the sale of land and houses.
C) No, Article 2 of the UCC does not allow for enforcement of this contract.
D) No, because there are unforeseen circumstances (the forest fire) which require additional work (reframing the house).
E) No, a court would deem that he was under contract and it would unjustly enrich Luke to charge more money to reframe the house.

Question 54

Which of the following is true regarding whether an accepted offer to pay part of a debt is consideration?

A) Partial payment is consideration under all circumstances.
B) Partial payment is not consideration under any circumstances.
C) Partial payment is consideration if a liquidated debt is involved.
D) Partial payment is consideration if an unliquidated debt is involved.
E) Partial payment is consideration if an exception applies to the general rule that partial payment is not consideration for an unliquidated debt.

Question 55

In return for his oral promise to pay her $100, Emma promises her uncle that she will not violate laws against speeding for one year. Emma abides by her promise, but her uncle refuses to pay. Which of the following is true regarding whether Emma is entitled to the money?

A) Emma is entitled to the money because she upheld her part of the bargain.
B) Emma is not entitled to recover because she had a preexisting duty to obey laws against speeding.
C) Emma is not entitled to recover because obeying traffic laws was actually good for her, not something that would constitute a detriment.
D) Emma is not entitled to recover unless the agreement was put under seal.
E) Emma is entitled to recover, but only ½ of the amount, because a family member is involved and the agreement was not in writing.

Question 56

When an accord and satisfaction is at issue, what is the new agreement to pay less than the creditor claims is owed called?

A) Satisfaction
B) Accord
C) Seal
D) Compromise
E) Acknowledgement

Question 57

If there is no dispute about the fact that money is owed and the amount of money owed in a contract, this is considered a(n) ________ debt.

A) actual
B) accepted
C) positive
D) liquidated
E) unliquidated

Question 58

Raphael, who owes $10,000 to his credit card company, sends a check to the credit card company for $50 and marks the check "paid in full." The credit card company inadvertently cashes the check, but the mistake is caught two weeks later and they offer to repay Raphael his $50. Raphael does not respond. Does accord and satisfaction exist?

A) Yes, because the bank cashed the check and this is sufficient for accord and satisfaction.
B) Yes, because Raphael did not accept the bank's offer for repayment.
C) Yes, because the bank has to offer a refund to Raphael within one week to avoid accord and satisfaction.
D) No, because the $50 payment accounted for less than 10 percent of the balance due.
E) No, because the bank offered to repay the money in a timely manner.

Question 59

A promise to do something that you are already obligated to do is ________.

A) illusory consideration
B) valid consideration only in the employment context
C) past consideration
D) a preexisting duty
E) promissory estoppel

Question 60

Lance contracts with Herman to fix the brakes on his car. The agreed upon amount is $750. When Herman is fixing the brakes, he notices that a wheel bearing needs replacement because it is completely broken. When Lance picks up his car the bill is $900. Lance says he will not pay this amount but the agreed upon $750. This is considered a(n) ________ debt.

A) disputed
B) unacknowledged
C) unaccepted
D) liquidated
E) unliquidated

Question 61

Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is a dispute over the amount of the debt, and the creditor agrees?

A) A liquidated debt is involved, and there is an accord and satisfaction.
B) A liquidated debt is involved, and there is an accord but no satisfaction.
C) A liquidated debt is involved, and there is neither a satisfaction nor an accord.
D) An unliquidated debt is involved, and there is an accord and satisfaction.
E) An unliquidated debt is involved, and there is an accord but not satisfaction.

Question 62

[Bank Robbery] Safe Bank was robbed of a significant sum of cash by a robber later identified as Victor Victory. Safe Bank offered a reward of $10,000 to anyone who captured or provided information leading to the capture of Victor. Kareem, a police officer in town, promised Safe Bank officials that he would apprehend Victor. While on duty, Kareem arrested Victor at a restaurant in town. He found Victor after Ursula, Victor's girlfriend, told Kareem about various places Victor enjoyed eating. The bank refuses to pay either Ursula or Kareem any of the reward money.
Which of the following is true regarding the offer of the reward?

A) It pertained to a bilateral contract that could be accepted only with consideration consisting of a promise.
B) It pertained to a bilateral contract that could be accepted only with consideration consisting of performance.
C) It pertained to a bilateral contract that could be accepted with consideration consisting of a promise or performance.
D) It pertained to a unilateral contract that could be accepted with consideration consisting of a promise.
E) It pertained to a unilateral contract that could be accepted with consideration consisting of performance.

Question 63

Nina, an experienced pool contractor, and Charlie agree on a price for Nina to build a pool in Charlie's backyard. Nina discovers that she did not initially include a sufficient charge for labor in her original price. She informs Charlie that unless she receives an extra $5,000 with which to hire workers, she cannot complete the job. Charlie agrees, thinking to himself that he has a way out. When Nina finishes the pool, Charlie refuses to pay the additional $5,000. Which of the following is the most likely result of their dispute?

A) Charlie will be required to pay because a typical, unilateral contract is involved, and he got the benefit of his bargain.
B) Charlie will be required to pay because a typical, bilateral contract is involved, and he got the benefit of his bargain.
C) Charlie will be required to pay because unforeseen circumstances are an exception to the preexisting duty rule.
D) Charlie will not be required to pay because Nina provided no additional consideration, and the preexisting duty rule applies.
E) Charlie will only be required to pay ½ of the agreed upon amounts because of the calculations involved under the preexisting duty rule.

Question 64

Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is no dispute over the amount or existence of the debt, and the creditor agrees?

A) A liquidated debt is involved, and there is an accord and satisfaction.
B) A liquidated debt is involved, and there is an accord but no satisfaction.
C) A liquidated debt is involved, and there is neither a satisfaction nor an accord.
D) An unliquidated debt is involved, and there is an accord and satisfaction.
E) An unliquidated debt is involved, and there is an accord but not satisfaction.

Question 65

[Bank Robbery] Safe Bank was robbed of a significant sum of cash by a robber later identified as Victor Victory. Safe Bank offered a reward of $10,000 to anyone who captured or provided information leading to the capture of Victor. Kareem, a police officer in town, promised Safe Bank officials that he would apprehend Victor. While on duty, Kareem arrested Victor at a restaurant in town. He found Victor after Ursula, Victor's girlfriend, told Kareem about various places Victor enjoyed eating. The bank refuses to pay either Ursula or Kareem any of the reward money.
In a lawsuit between the bank and Ursula, regarding the reward funds, who is likely to prevail and why?

A) The bank is likely to prevail because Ursula only provided past consideration.
B) The bank is likely to prevail because Ursula was tainted by being Victor's girlfriend.
C) The bank is likely to prevail because no valid bilateral contract existed.
D) Ursula is likely to prevail because a valid bilateral contract existed.
E) Ursula is likely to prevail because an enforceable unilateral contract exists based on her provision of information leading to the capture of Victor.

Question 66

[Garage Sale] While cleaning out his garage, Ezra offers to sell Mia a used computer for $200. Mia replies, "I'll think about it and buy it if I decide to do so." Ezra also calls Irina and offers to sell Irina a used business law book for $50. She asks if she can clean his apartment in exchange for the book, instead of paying cash, and he agrees. Ezra also agrees to sell a communications book for $5 to Tam, who promises to pick it up the next day. Meanwhile, Diego comes to visit and offers Ezra $45 for the business law book. Ezra sells it to him because he decides his apartment is clean enough. Diego also offers Ezra $50 for the used computer. Ezra sells it to Diego because he does not expect to hear from Mia. Diego sees the communications book and offers Ezra $45 for it. Ezra decides to forget about Tam and proceeds to sell the book to Diego for $45. The next day Irina shows up to clean Ezra's apartment and is very angry because Ezra did not save the book for her. Irina claims that Ezra breached their contract because they had a deal. Ezra says that they never had a deal because no consideration was present. He also says that even if cleaning house would be considered consideration, any housekeeping done would have been wholly inadequate to support receipt of the book because his house was already clean. Tam is also angry because Ezra sold the communications book, and informs him that he breached the contract he had with her. Ezra tells her that he had no obligation to hold the book for her because they had a unilateral contract. Two days after they first spoke, Mia tells Ezra that she would like the computer. She tells him that her response bound him and that he should have awaited her action. Ezra tells Diego that he needs to return everything for a full refund. Diego refuses.
Which of the following is true regarding whether Ezra breached a contract with Mia?

A) Mia's statement created an illusory promise, which cannot be enforced.
B) Ezra breached the contract because he had an obligation to wait a reasonable length of time for Mia's response, and waiting only two days was not reasonable.
C) Ezra did not breach the contract with Mia because he waited a reasonable amount of time before selling the computer.
D) Ezra did not breach the contract with Mia because it was for the sale of goods and, therefore, a typical contract.
E) Ezra did not breach the contract, but Mia can recover based on promissory estoppel.

Question 67

[Debt Trouble] Isabella has significant credit card debt following a semester abroad in Italy. Her tuition and living expenses had ended up costing more than she had anticipated. Isabella recently took a business law class and thought that she might be able to find a way out of her troubles. She owed $2,000 to Credit Card Company A and $3,000 to Credit Card Company B. She also owed $2,000 to the local Italian university for tuition and book expenses. Isabella is in negotiations with the university over the amount owed because one of the classes she had originally enrolled in was cancelled halfway through the semester. While the cancellation of that class did not significantly affect her academic career, Isabella thought that she should get at least some deduction on the overall tuition bill. Isabella called Credit Card Company A and told them that she was a student and could not afford to pay the entire $3,000 she owed. The representative of Credit Card Company A, who was working her last day, told Isabella just to pay $50, and that would be considered payment in full. The representative sent Isabella an e-mail to that effect. Isabella was very pleased and immediately quit her job at the campus bookstore, believing that with the reduction from Credit Card Company A, she would have a sufficient amount of extra money. Isabella then called Credit Card Company B and once again pled her case as a student. She talked Credit Card Company B into taking a used car with a blown-up engine worth around $1,000 in exchange for the debt. Transfer details regarding the car were worked out through e-mail. Finally, Isabella sent the university a check for $1,000 marked "paid in full." Much to her surprise and pleasure, the university did indeed cash the check. Isabella, however, was distraught to find that within 30 days, Credit Card Company A sent her a bill for $1,950, Credit Card Company B sent her a bill for $3,000, and the university sent her a check for $1,000 along with a bill for $2,000. Faced with all these claims, Isabella decided to look for work, and ended up finding work she enjoyed as a translator. Assume all credit card company representatives had authority to make the agreements at issue.
What is Isabella's best argument in attempting to avoid obligations to Credit Card Company A?

A) That she reasonably relied to her detriment and that she should be able to enforce the company's promise under a theory of promissory estoppel.
B) That her promise did indeed constitute consideration because of the theory of moral consideration, and Credit Card Company A clearly expressed its concern with student debt.
C) That her promise did indeed constitute consideration because it allowed Credit Card Company A to report forgiveness of debt rather than default on its financial reports.
D) That because of unforeseen circumstances, she should be able to avoid the debt.
E) That the debt became illusory based on the promise made by Credit Card Company A.

Question 68

Which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt when the debt itself, in its entirety, is in dispute, and the creditor agrees?

A) A liquidated debt is involved, and there is an accord and satisfaction.
B) A liquidated debt is involved, and there is an accord but no satisfaction.
C) A liquidated debt is involved, and there is neither a satisfaction nor an accord.
D) An unliquidated debt is involved, and there is an accord and satisfaction.
E) An unliquidated debt is involved, and there is an accord but not satisfaction.

Question 69

[Bank Robbery] Safe Bank was robbed of a significant sum of cash by a robber later identified as Victor Victory. Safe Bank offered a reward of $10,000 to anyone who captured or provided information leading to the capture of Victor. Kareem, a police officer in town, promised Safe Bank officials that he would apprehend Victor. While on duty, Kareem arrested Victor at a restaurant in town. He found Victor after Ursula, Victor's girlfriend, told Kareem about various places Victor enjoyed eating. The bank refuses to pay either Ursula or Kareem any of the reward money.
In a lawsuit between the bank and Kareem regarding the reward funds, who is likely to prevail and why?

A) The bank is likely to prevail because Kareem only provided past consideration.
B) The bank is likely to prevail because Kareem had a preexisting duty to catch Victor.
C) The bank is likely to prevail because Kareem's promise to catch Victor was illusory.
D) Kareem is likely to prevail because his promise to catch Victor resulted in a binding bilateral contract.
E) Kareem is likely to prevail because an enforceable unilateral contract exists based on his performance.

Question 70

Which of the following was the result in the case in the text Hamer v. Sidway, in which, after performance by his nephew, an uncle reneged on a promise to the nephew to pay him $5,000 if the nephew refrained from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he was 21 years of age?

A) That because refraining from the conduct at issue benefited his character and health, the nephew could not recover.
B) That no consideration was involved, and the nephew could not recover because the consideration from him did not consist of money or goods.
C) That no consideration was involved, and the nephew could not recover because the proof established that the nephew had no interest in engaging in the items at issue, and avoiding them was no detriment to him.
D) That the nephew could recover because he supplied consideration.
E) That the nephew could recover, but only under promissory estoppel could he recover an amount compensating him for his reliance on the promise.

Question 71

Nina, an experienced pool contractor, and Charlie, a homeowner, agree on a price for Nina to build a pool in Charlie's backyard. While the area is not known for rocks, Nina unexpectedly encounters a significant problem with solid rock in the backyard when she starts to dig. She tells Charlie that unless she receives an extra $5,000, she cannot complete the job. Charlie agrees, thinking to himself that he has a way out. When Nina finishes the pool, Charlie refuses to pay the additional $5,000. Which of the following is the most likely result of their dispute?

A) Charlie will be required to pay because a typical, unilateral contract is involved, and he got the benefit of his bargain.
B) Charlie will be required to pay because a typical, bilateral contract is involved, and he got the benefit of his bargain.
C) Charlie will be required to pay because unforeseen circumstances are an exception to the preexisting duty rule.
D) Charlie will not be required to pay because he provided no additional consideration, and the preexisting duty rule applies.
E) Charlie will only be required to pay ½ of the agreed upon amounts because of the calculations involved under the preexisting duty rule.

Question 72

[Debt Trouble] Isabella has significant credit card debt following a semester abroad in Italy. Her tuition and living expenses had ended up costing more than she had anticipated. Isabella recently took a business law class and thought that she might be able to find a way out of her troubles. She owed $2,000 to Credit Card Company A and $3,000 to Credit Card Company B. She also owed $2,000 to the local Italian university for tuition and book expenses. Isabella is in negotiations with the university over the amount owed because one of the classes she had originally enrolled in was cancelled halfway through the semester. While the cancellation of that class did not significantly affect her academic career, Isabella thought that she should get at least some deduction on the overall tuition bill. Isabella called Credit Card Company A and told them that she was a student and could not afford to pay the entire $3,000 she owed. The representative of Credit Card Company A, who was working her last day, told Isabella just to pay $50, and that would be considered payment in full. The representative sent Isabella an e-mail to that effect. Isabella was very pleased and immediately quit her job at the campus bookstore, believing that with the reduction from Credit Card Company A, she would have a sufficient amount of extra money. Isabella then called Credit Card Company B and once again pled her case as a student. She talked Credit Card Company B into taking a used car with a blown-up engine worth around $1,000 in exchange for the debt. Transfer details regarding the car were worked out through e-mail. Finally, Isabella sent the university a check for $1,000 marked "paid in full." Much to her surprise and pleasure, the university did indeed cash the check. Isabella, however, was distraught to find that within 30 days, Credit Card Company A sent her a bill for $1,950, Credit Card Company B sent her a bill for $3,000, and the university sent her a check for $1,000 along with a bill for $2,000. Faced with all these claims, Isabella decided to look for work, and ended up finding work she enjoyed as a translator. Assume all credit card company representatives had authority to make the agreements at issue.
What is Credit Card Company A's best argument in relation to enforcing Isabella's obligations?

A) That the agreement constituted a bad deal for the card company.
B) That only past consideration was involved.
C) That student debt is not dischargeable as a matter of law and that the card company owed no obligation to Isabella regardless of statements made.
D) That its promise was clearly an illusory promise that Isabella should have known could not be enforced once the card company discovered the true circumstances.
E) That no consideration existed for its promise, and that based on Isabella's circumstances and behavior, enforcing the debt would not result in injustice to Isabella.

Question 73

Which of the following was involved when the government, in attempting to help AIG, agreed to lend AIG up to $85 billion in exchange for nearly 80 percent of AIG's stock?

A) An accord and satisfaction
B) An accord but not a satisfaction
C) A unilateral contract
D) A bilateral contract
E) An unliquidated contract

Question 74

Which of the following is true regarding the effect of a debtor offering to pay a different type of payment, for example, goods instead of money, on a debt for which there is not a dispute over the amount or existence of the debt, and the creditor agrees?

A) A liquidated debt is involved, and there is an accord and satisfaction.
B) A liquidated debt is involved, and there is an accord but no satisfaction.
C) A liquidated debt is involved, and there is not a satisfaction or an accord.
D) An unliquidated debt is involved, and there is an accord and satisfaction.
E) An unliquidated debt is involved, and there is an accord but not satisfaction.

Question 75

[Debt Trouble] Isabella has significant credit card debt following a semester abroad in Italy. Her tuition and living expenses had ended up costing more than she had anticipated. Isabella recently took a business law class and thought that she might be able to find a way out of her troubles. She owed $2,000 to Credit Card Company A and $3,000 to Credit Card Company B. She also owed $2,000 to the local Italian university for tuition and book expenses. Isabella is in negotiations with the university over the amount owed because one of the classes she had originally enrolled in was cancelled halfway through the semester. While the cancellation of that class did not significantly affect her academic career, Isabella thought that she should get at least some deduction on the overall tuition bill. Isabella called Credit Card Company A and told them that she was a student and could not afford to pay the entire $3,000 she owed. The representative of Credit Card Company A, who was working her last day, told Isabella just to pay $50, and that would be considered payment in full. The representative sent Isabella an e-mail to that effect. Isabella was very pleased and immediately quit her job at the campus bookstore, believing that with the reduction from Credit Card Company A, she would have a sufficient amount of extra money. Isabella then called Credit Card Company B and once again pled her case as a student. She talked Credit Card Company B into taking a used car with a blown-up engine worth around $1,000 in exchange for the debt. Transfer details regarding the car were worked out through e-mail. Finally, Isabella sent the university a check for $1,000 marked "paid in full." Much to her surprise and pleasure, the university did indeed cash the check. Isabella, however, was distraught to find that within 30 days, Credit Card Company A sent her a bill for $1,950, Credit Card Company B sent her a bill for $3,000, and the university sent her a check for $1,000 along with a bill for $2,000. Faced with all these claims, Isabella decided to look for work, and ended up finding work she enjoyed as a translator. Assume all credit card company representatives had authority to make the agreements at issue.
Which of the following would be the result in a majority of states in regard to Isabella's obligation to the Italian university?

A) That because the debt was unliquidated and the university cashed the check, an accord and satisfaction occurred, and Isabela owes nothing.
B) That because the debt was liquidated, no accord and satisfaction occurred, and Isabella owes the full $2,000.
C) That in order to satisfy equitable principles, the parties would split the remaining debt with Isabella owing $1,000.
D) That under the UCC, Isabella would be required to pay the full amount, but the university would be estopped from charging any interest.
E) That because the university offered, through issuance of the check, full repayment, no accord and satisfaction existed; Isabella owes the full $2,000.

Question 76

[Garage Sale] While cleaning out his garage, Ezra offers to sell Mia a used computer for $200. Mia replies, "I'll think about it and buy it if I decide to do so." Ezra also calls Irina and offers to sell Irina a used business law book for $50. She asks if she can clean his apartment in exchange for the book, instead of paying cash, and he agrees. Ezra also agrees to sell a communications book for $5 to Tam, who promises to pick it up the next day. Meanwhile, Diego comes to visit and offers Ezra $45 for the business law book. Ezra sells it to him because he decides his apartment is clean enough. Diego also offers Ezra $50 for the used computer. Ezra sells it to Diego because he does not expect to hear from Mia. Diego sees the communications book and offers Ezra $45 for it. Ezra decides to forget about Tam and proceeds to sell the book to Diego for $45. The next day Irina shows up to clean Ezra's apartment and is very angry because Ezra did not save the book for her. Irina claims that Ezra breached their contract because they had a deal. Ezra says that they never had a deal because no consideration was present. He also says that even if cleaning house would be considered consideration, any housekeeping done would have been wholly inadequate to support receipt of the book because his house was already clean. Tam is also angry because Ezra sold the communications book, and informs him that he breached the contract he had with her. Ezra tells her that he had no obligation to hold the book for her because they had a unilateral contract. Two days after they first spoke, Mia tells Ezra that she would like the computer. She tells him that her response bound him and that he should have awaited her action. Ezra tells Diego that he needs to return everything for a full refund. Diego refuses.
Which of the following is true regarding Tam's claim that by selling the communications book to Diego for a higher price, Ezra breached the contract he had with her?

A) Tam is correct.
B) Tam is correct only if she can establish that she had prior dealings with Ezra.
C) Tam is correct only if she can establish that she had provided past consideration in addition to the amount she agreed to pay for the book.
D) Tam is incorrect because her acceptance was illusory.
E) Tam is incorrect because the amount she agreed to pay was significantly less than the fair market value of the book and, therefore, did not amount to consideration.

Question 77

[Debt Trouble] Isabella has significant credit card debt following a semester abroad in Italy. Her tuition and living expenses had ended up costing more than she had anticipated. Isabella recently took a business law class and thought that she might be able to find a way out of her troubles. She owed $2,000 to Credit Card Company A and $3,000 to Credit Card Company B. She also owed $2,000 to the local Italian university for tuition and book expenses. Isabella is in negotiations with the university over the amount owed because one of the classes she had originally enrolled in was cancelled halfway through the semester. While the cancellation of that class did not significantly affect her academic career, Isabella thought that she should get at least some deduction on the overall tuition bill. Isabella called Credit Card Company A and told them that she was a student and could not afford to pay the entire $3,000 she owed. The representative of Credit Card Company A, who was working her last day, told Isabella just to pay $50, and that would be considered payment in full. The representative sent Isabella an e-mail to that effect. Isabella was very pleased and immediately quit her job at the campus bookstore, believing that with the reduction from Credit Card Company A, she would have a sufficient amount of extra money. Isabella then called Credit Card Company B and once again pled her case as a student. She talked Credit Card Company B into taking a used car with a blown-up engine worth around $1,000 in exchange for the debt. Transfer details regarding the car were worked out through e-mail. Finally, Isabella sent the university a check for $1,000 marked "paid in full." Much to her surprise and pleasure, the university did indeed cash the check. Isabella, however, was distraught to find that within 30 days, Credit Card Company A sent her a bill for $1,950, Credit Card Company B sent her a bill for $3,000, and the university sent her a check for $1,000 along with a bill for $2,000. Faced with all these claims, Isabella decided to look for work, and ended up finding work she enjoyed as a translator. Assume all credit card company representatives had authority to make the agreements at issue.
Which of the following should be the result in regard to Isabella's obligation to Credit Card Company B?

A) That the company is not bound by its promise because the debt was liquidated.
B) That because Isabella offered and the company accepted a different performance in discharge of the obligation, the company is bound.
C) That because the car is worth only $1,000, nowhere near the amount of the debt, the company is released from its promise.
D) That under equitable principles, upon disaffirming the agreement, Isabella may keep the car, and the company must take a deduction of 50% on all amounts due.
E) That under equitable principles, upon disaffirming the agreement, Isabella must transfer the car to the company, and the company must take a deduction of 50% on all amounts due after sums received from the sale of the car are credited to Isabella's account.

Question 78

Upon graduating from college, Anum receives a job offer across the country and moves there, giving up her apartment and cancelling all her other job interviews in the process. After she arrives, she is informed that there is no job. In most states, what may she recover?

A) Nothing
B) Reliance damages
C) Liquidated damages
D) Acknowledged damages
E) Approved damages

Question 79

[Garage Sale] While cleaning out his garage, Ezra offers to sell Mia a used computer for $200. Mia replies, "I'll think about it and buy it if I decide to do so." Ezra also calls Irina and offers to sell Irina a used business law book for $50. She asks if she can clean his apartment in exchange for the book, instead of paying cash, and he agrees. Ezra also agrees to sell a communications book for $5 to Tam, who promises to pick it up the next day. Meanwhile, Diego comes to visit and offers Ezra $45 for the business law book. Ezra sells it to him because he decides his apartment is clean enough. Diego also offers Ezra $50 for the used computer. Ezra sells it to Diego because he does not expect to hear from Mia. Diego sees the communications book and offers Ezra $45 for it. Ezra decides to forget about Tam and proceeds to sell the book to Diego for $45. The next day Irina shows up to clean Ezra's apartment and is very angry because Ezra did not save the book for her. Irina claims that Ezra breached their contract because they had a deal. Ezra says that they never had a deal because no consideration was present. He also says that even if cleaning house would be considered consideration, any housekeeping done would have been wholly inadequate to support receipt of the book because his house was already clean. Tam is also angry because Ezra sold the communications book, and informs him that he breached the contract he had with her. Ezra tells her that he had no obligation to hold the book for her because they had a unilateral contract. Two days after they first spoke, Mia tells Ezra that she would like the computer. She tells him that her response bound him and that he should have awaited her action. Ezra tells Diego that he needs to return everything for a full refund. Diego refuses.
Which of the following is true regarding Ezra's claim concerning the inadequacy of house cleaning as consideration?

A) Ezra is correct because cleaning house would not constitute a benefit to the promisor.
B) Ezra is correct because cleaning house would not constitute a detriment to the promisee.
C) Ezra is correct because Irina had only promised, but had not actually performed.
D) Although, contrary to Ezra's assertion, house cleaning can be consideration, it was not in this case, as his apartment was already fairly clean.
E) Ezra is incorrect because house cleaning can constitute consideration that would support a contract, and the court would not likely be concerned with the fact that the cleaning duties would be light.

Question 80

[Garage Sale] While cleaning out his garage, Ezra offers to sell Mia a used computer for $200. Mia replies, "I'll think about it and buy it if I decide to do so." Ezra also calls Irina and offers to sell Irina a used business law book for $50. She asks if she can clean his apartment in exchange for the book, instead of paying cash, and he agrees. Ezra also agrees to sell a communications book for $5 to Tam, who promises to pick it up the next day. Meanwhile, Diego comes to visit and offers Ezra $45 for the business law book. Ezra sells it to him because he decides his apartment is clean enough. Diego also offers Ezra $50 for the used computer. Ezra sells it to Diego because he does not expect to hear from Mia. Diego sees the communications book and offers Ezra $45 for it. Ezra decides to forget about Tam and proceeds to sell the book to Diego for $45. The next day Irina shows up to clean Ezra's apartment and is very angry because Ezra did not save the book for her. Irina claims that Ezra breached their contract because they had a deal. Ezra says that they never had a deal because no consideration was present. He also says that even if cleaning house would be considered consideration, any housekeeping done would have been wholly inadequate to support receipt of the book because his house was already clean. Tam is also angry because Ezra sold the communications book, and informs him that he breached the contract he had with her. Ezra tells her that he had no obligation to hold the book for her because they had a unilateral contract. Two days after they first spoke, Mia tells Ezra that she would like the computer. She tells him that her response bound him and that he should have awaited her action. Ezra tells Diego that he needs to return everything for a full refund. Diego refuses.
Which of the following is true regarding the dispute between Ezra and Diego regarding whether Diego must return anything?

A) Diego must return only the computer.
B) Diego must return only the business law book.
C) Diego must return only the communications book.
D) Diego must return the computer, the business law book, and the communications book.
E) Diego does not legally have to return anything.