Deck 13: Consideration

Question 1

Rescission is the remaking of a contract so as to enrich one party at the expense of the other.

Answer 1

False

Question 2

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

Answer 2

False

Question 3

To be legally sufficient, consideration must be evidenced by something tangible.

Answer 3

False

Question 4

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

Question 5

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

Question 6

If a promise is made, it will be enforced.

Question 7

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

Question 8

Performance can constitute the consideration that creates a contractual obligation.

Question 9

The fact that the word consideration is used in an agreement means, by itself, that consideration has been given.

Question 10

A promise to do what one already has a legal duty to do constitutes legally sufficient consideration.

Question 11

Legally sufficient consideration is something of value in the eyes of the law.

Question 12

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

Question 13

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

Question 14

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

Question 15

A promise made in return for an act or event that has not yet taken place can be fully enforceable.

Question 16

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

Question 17

In general, a court will question the adequacy of consideration based solely on the comparative value of the things exchanged.

Question 18

Legal sufficiency of consideration is the same as adequacy of consideration.

Question 19

Parties are usually free to bargain as they wish.

Question 20

Essentially, adequacy of consideration concerns the fairness of the bargain.

Question 21

Rose questions whether there is consideration for her contract to perform with Saxophone Symphony. 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 22

A release does not require consideration to be legally binding.

Question 23

An obligation is enforceable only if it is made in return for actions or events that have already taken place.

Question 24

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

Question 25

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

Question 26

An illusory promise is an unenforceable promise.

Question 27

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

Question 28

Promissory estoppel requires that justice will be better served by the enforcement of the promise.

Question 29

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 30

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

Question 31

Ross promises to pay Sara, his niece, $5,000 if she obtains her degree at Tech University, where she is in her third year. Sara graduates. Ross is
a.
​not required to pay because Sara was already at Tech.
b.
​not required to pay because obtaining a degree benefits Sara.
c.
​required to pay because a job can be hard to find after college.
d.
​required to pay because Sara obtained a degree at Tech.

Question 32

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

Question 33

A release is an agreement in which one party gives up the right to pursue a legal claim against another party.

Question 34

Fact Pattern 13-1
Sports Bar & Grill and Tea & Tarts Bakery are adjacent businesses with adjoining parking lots. Sports Bar offers Tea & Tarts a discount on purchases if the bakery will not tow the cars of Sports Bar's patrons who park in the bakery's lot.
Refer to Fact Pattern 13-1. Tea & Tarts's forbearance from towing is legally sufficient consideration

A) ​because it is a promise of something of value.
B) ​only if Sports Bar's patrons park in Tea & Tarts's lot.
C) ​only if Tea & Tarts's customers cannot park in its lot because it is full.
D) ​under no circumstances.

Question 35

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

Question 36

Fact Pattern 13-1
Sports Bar & Grill and Tea & Tarts Bakery are adjacent businesses with adjoining parking lots. Sports Bar offers Tea & Tarts a discount on purchases if the bakery will not tow the cars of Sports Bar's patrons who park in the bakery's lot.
Refer to Fact Pattern 13-1. Sports Bar's discount is legally sufficient consideration

A) ​because it is a promise of something of value.
B) ​only if Sports Bar adds a cash rebate.
C) ​only if Tea & Tarts uses it.
D) ​under no circumstances.

Question 37

Kim promises to pay Leo $500 to install a sump pump in Kim's warehouse. Leo completes the installation. The act of installing the pump

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

Question 38

A covenant not to sue is against public policy.

Question 39

In a covenant not to sue, the parties substitute a contractual obligation for some other type of action.

Question 40

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

Question 41

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

Question 42

Fact Pattern 13-2​
Boyd defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 13-2. If, as Boyd claims, the consideration in this problem is inadequate, it may indicate a lack of

A) ​accord in Boyd's satisfaction with the value of the deal.
B) ​voluntary consent.
C) ​flexibility on the part of College Credit to accommodate Boyd's needs.
D) ​"heft," "substance," or "weight" in the terms of the contract.

Question 43

Fact Pattern 13-2​
Boyd defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 13-2. "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 44

Fact Pattern 13-3​
Sal contracts with Tasty Pizza 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 13-3. Sal and Tasty

A) ​may rescind their entire contract.
B) ​may rescind their contract to the extent that it is executory.
C) ​must perform their entire contract.
D) ​must perform the part of their contract that is executory.

Question 45

Digital Enterprise, Inc., promises to pay its employees a year-end bonus "if profits continue to be high and management agrees at the time." This is

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

Question 46

Rory questions whether there is consideration for his contract with Silver Spurs Club to exchange his performance of country music on certain dates for Silver'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 47

Fact Pattern 13-3​
Sal contracts with Tasty Pizza 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 13-3. The next day, Sal changes his mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sal and Tasty

A) ​may agree to a new contract, but it cannot include a new price.
B) ​may agree to a new contract that includes the new price.
C) ​must perform their original contract.
D) ​must perform the part of their original contract that is executory.

Question 48

Frisco offers to buy a Gibson guitar owned by Hayden for twice what Hayden 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 49

Delightful Weddings, LLC, and Event Catering Inc. have an executory contract. They agree to rescind their contract and simultaneously enter into a new contract. If the initial contract was subject to a preexisting duty, the new contract will most likely be

A) ​unenforceable.
B) ​enforceable.
C) ​valid.
D) ​voidable.

Question 50

​Fact Pattern 13-4
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 13-4. If Teatro says it is asking for the extra $250,000 because it has encountered extraordinary unforeseen difficulties that will add considerable 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 51

Maria is the sheriff of Narez, Texas. Oscar robs a Narez gas station and a $500 reward is offered for his capture. When, later, Maria finds and arrests him, with respect to the reward, she can
a.
​collect it.
b.
​not collect it because she had a preexisting duty to capture Oscar.
c.
​not collect it because it is not legally sufficient consideration.
d.
​not collect it because it would be unconscionable.

Question 52

D'Sean promises to pay his personal assistant Edie $50,000 in consideration of the services she provided over the years. D'Sean never makes the payment. D'Sean's promise is
a.
​enforceable for the entire $50,000.
b.
​enforceable to the extent of what Edie's services were actually worth.
c.
​not enforceable because the consideration is in the past.
d.
​not enforceable because the failure to pay is an unforeseen difficulty.

Question 53

Kent buys Lizzie's house for $100,000, which is the fair market value of the house. If the contract is later disputed in court, the court is likely to declare Kent's consideration

A) ​inadequate.
B) ​past.
C) ​legally sufficient.
D) ​illusory.

Question 54

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 55

Fact Pattern 13-2​
Boyd defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 13-2. A court is most likely to evaluate the adequacy of consideration if

A) ​a thing exchanged has no intangible value to one of the parties.
B) ​something exchanged is not of direct economic or financial value.
C) ​the items exchanged were of unequal value.
D) ​there is a gross disparity in the value of the consideration exchanged.

Question 56

​Fact Pattern 13-4
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 13-4. 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 57

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. Valley's agreement to pay more 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 58

Pie in the Sky Aircraft Inc. files a suit against Quest Engineering Inc., claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the consideration 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

Stephen offers Theresa $1,000 for her collection of rare coins. She accepts. 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 13-4
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 13-4. ​If Teatro says it is asking for the extra $250,000 because ordinary business expenses have increased, 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

Carly pledges to donate $10,000 to Disaster Recovery Inc. (DRI). On the basis of the pledge, DRI orders additional supplies. If Carly 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 an illusory promise.
D) ​under the doctrine of promissory estoppel.

Question 62

While sailboarding, Jolene is injured when Kirby carelessly crosses her path. Kirby's insurance company offers Jolene $50,000 to release Kirby from liability, and she accepts. Later, Jolene learns that her injuries are more serious than she realized. The release is

A) ​enforceable.
B) ​unenforceable because Jolene's injuries are unforeseeably difficult.
C) ​unenforceable because Kirby has a preexisting duty to pay.
D) ​unenforceable because the release is an illusory promise.

Question 63

After an accident with a vehicle licensed to Guardian Security Company, Heidi signs a covenant not to sue Guardian Security for damages in a tort action if it pays for the damage to her car. This covenant is

A) ​a bar to recovery if Guardian Security pays.
B) ​an illusory contract.
C) ​barred by the preexisting duty rule.
D) ​barred by the doctrine of promissory estoppel.

Question 64

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 65

Fact Pattern 13-5​
Brick and Carmen are in an auto accident. Brick offers Carmen $2,000 if she promises not to pursue her potential legal claim against Brick. Carmen agrees. Later, Carmen 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 13-5. In Carmen's suit against Brick to recover her repair and medical expenses, Carmen will most likely recover

A) ​half the amount to pay the costs over what Brick already paid Carmen.
B) ​nothing.
C) ​the estimated amount to pay those costs and any other liability.
D) ​the exact amount to pay those costs and no more.

Question 66

Desi's Uncle Eduardo tells Desi, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." This promise
a.
​is illusory.
b.
​is enforceable.
c.
​relies on forbearance.
d.
​consists of a preexisting duty.

Question 67

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 rescission and new contract.
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 68

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

A) ​a covenant not to sue.
B) ​an illusory promise.
C) ​an unforeseen difficulty.
D) ​a release.

Question 69

Molly's motorcycle is damaged in an accident caused by Luc's negligence. Luc agrees to pay Molly $25,000 if she agrees to release him from further liability. Molly agrees. If Molly's damages ultimately exceed $25,000, she can

A) ​recover the balance for lack of consideration.
B) ​recover the balance because the consideration was past.
C) ​recover the balance due to unforeseen events.
D) ​not recover the balance.

Question 70

Fact Pattern 13-5​
Brick and Carmen are in an auto accident. Brick offers Carmen $2,000 if she promises not to pursue her potential legal claim against Brick. Carmen agrees. Later, Carmen 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 13-5. The agreement between Brick and Carmen is

A) ​a covenant not to sue.
B) ​an illusory promise.
C) ​a release.
D) ​promissory estoppel.

Question 71

Rudy files a suit against Shakes & Shingles, Roofing Contractor, Inc., under the doctrine of promissory 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 72

Dean, the president of Billing & Credit Company, promises to pay his employee Ewing, who is dangerously obese, $10 for every pound that he loses within the next two years. Ewing agrees, diets and exercises, loses 154 pounds, and asks Dean for $1,540. Dean refuses to pay, saying that he does not remember the promise, but that even if he did make it, there was no consideration, and Ewing's improved health is a sufficient benefit for his effort and sacrifice. Ewing files a suit against Dean. In whose favor is the court likely to rule, and why?