Deck 9: Consideration and Cyber-Payments

Question 1

The issue in the Classic Case, Hamer v. Sidway, involved the question of legal detriment.

Answer 1

True
Explanation: As the court noted "when William gave up something that he had a legal right to do, he had suffered a detriment sufficient to provide the consideration needed to make the agreement into a bona fide contract." In other words, William had provided consideration (or legal detriment) and a contract was created when he performed.

Question 2

In an enforceable agreement, a promise itself is adequate consideration when it represents something of value.

Answer 2

True
Explanation: There are no specific requirements, other than being legal, regarding what one party may promise the other party in return for a pledge to deliver goods and services. The promise itself is adequate consideration when it represents something of value. Thus, the promise to assist another to repair an automobile would be something of value promised. The exact value would be determined by the parties themselves.

Question 3

Maria's daughter is seriously ill. Desperate, Maria deeds her $250,000 house to a physician for $2,500 of medical treatment. This contract is likely unconscionable.

Answer 3

True
Explanation: Although courts do not generally inquire as to the adequacy of consideration, a court may refuse to enforce a contract or any clause of a contract if it considers the contract or clause unconscionable-that is, the consideration is so ridiculously inadequate that it shocks the court's conscience. This designation usually happens when there is a great in-equality in bargaining power between the two parties.

Question 4

The amendments to the Identity Theft and Assumption Deterrence Act added a new crime to the original statute, called aggravated identity theft.

Question 5

Alan promises to pay a debt that was discharged in bankruptcy. This promise requires new consideration under state laws in most cases.

Question 6

A police officer solves a crime assigned to her by her police supervisor. She may collect the reward offered by the crime victim.

Question 7

Consideration does not require that the benefits and sacrifices promised between the parties be legal.

Question 8

Laura promises to pay Stuart "a reasonable amount" for repairing her car. Stuart sends Laura a $500 invoice and Laura sends Stuart a $350 check marked "payment in full". There is an accord and satisfaction created if Stuart cashes the check.

Question 9

Under the UCC, a signed, written offer made by a merchant that allows acceptance at any time within a 90-day time period is not binding unless the offeree provides consideration.

Question 10

The UCC has eliminated the use of the seal in all sale-of-goods contracts.

Question 11

Uncle Joe promises Mary a new car on her birthday. This is a contract.

Question 12

There is no legal detriment when a person promises not to sue.

Question 13

ABC Co. promises to pay Sarah $1,000 for the "excellent work she has done in the past." When ABC does not pay, Sarah may sue and collect the $1,000.

Question 14

Danny agrees not to go duck hunting if "Save the Ducks" pays him $100. This is forbearance on Danny's part.

Question 15

The law will not enforce an agreement that has not been bargained for.

Question 16

Ever since industrial capitalism became the primary economic engine of the West, courts no longer looked to see if the things exchanged in a contract were of equal value.

Question 17

The legal term used to describe the sacrifice that each party must experience is that party's bargained-for-exchange.

Question 18

When a contract is unconscionable, it is said to shock the court's conscience.

Question 19

A bankrupt individual is required by law to eventually repay all of his or her debts to creditors.

Question 20

Traditionally, a charitable pledge was not enforceable as a contractual obligation.

Question 21

____________ is the mutual agreement of less than what has been billed to the debtor.

A) Accord and satisfaction
B) Bankruptcy
C) Accord
D) Consideration

Question 22

Lisa agrees to sell Deb an electronic entertainment center worth $1,000 for $700 cash in order to have a rapid sale. Later, Lisa insists that she may rescind this agreement since the agreed price was 30% below fair market value. Lisa may:

A) rescind, since the consideration is inadequate.
B) rescind, since the agreement is unconscionable.
C) rescind, since the agreement is not bargained for.
D) not rescind the agreement once Deb accepts.

Question 23

Tasha phones Robert and asks if she can borrow his vacuum cleaner to clean her apartment before her parents visit. Robert agrees to this. But when Tasha goes to pick up the vacuum, Robert refuses to give it to her. Which of the following statements is true?

A) A bargained-for exchange has occurred, so Robert must loan Tasha the vacuum cleaner.
B) A bargained-for exchange has not occurred, so Robert does not have to loan Tasha the vacuum cleaner.
C) Robert has promised Tasha something of value, so he must loan her the vacuum cleaner.
D) Robert has committed a breach of contract.

Question 24

The ____________ outlaws the unauthorized transfer, possession, or use of a means of identifying another person to violate federal law.

A) Aggravated Identity Theft Act
B) Identity Theft Criminality Act
C) Identity Theft Penalty Enhancement Act
D) Uniform Electronic Transactions Act

Question 25

When a consideration is so ridiculously inadequate that it shocks the court's conscience, it is considered:

A) unconscionable.
B) forbearance.
C) illusory.
D) detrimental.

Question 26

Today, promises under seal are:

A) enforceable in some states for contracts not involving goods.
B) enforceable under the UCC for contracts involving goods.
C) enforceable under the UCC if made by a merchant, in writing, stating the time period over which the offer will remain open.
D) unenforceable as a consideration in a new contract.

Question 27

Which of the following legal detriments is known as forbearance?

A) Doing something that one has a legal right to do.
B) Doing something that one does not have legal right to do.
C) Giving up something that one has a legal right to keep.
D) Refraining from doing something one has a legal right to do.

Question 28

Assuming he has the right, Tom's promise ____________, also called ____________, is ____________ when it is supported by ____________.

A) of forbearance; promissory estoppel; enforceable; consideration
B) to donate money; charitable pledge; enforceable; firm offer
C) not to sue; forbearance; enforceable; consideration
D) not to sue; consideration; enforceable; legal detriment

Question 29

Edwin, Marketing VP of Amalgamated Sales, Inc., writes a letter dated August 1 to Bargain Stores, Inc. offering to sell candy to Bargain Stores at $50 per case for the next thirty days. Bargain Stores then contracts with local retailers based on the offer from Amalgamated. Ten days later, Amalgamated receives an offer from Dandy Stores, Inc. to purchase this same candy at a price of $75 per case. Can Amalgamated withdraw its offer to Bargain Stores?

A) Yes, the offer may be withdrawn since it lacks consideration.
B) No, as this is a firm offer.
C) Yes, the offer was simply an invitation to negotiate.
D) No, as this is only an option.

Question 30

A(n) ____________ is a promise to do something that one is already obligated to do by law or some other agreement that cannot be made consideration for a new contract.

A) reaffirmation
B) option
C) promissory estoppel
D) preexisting duty

Question 31

The legal term used to describe the sacrifice that each party must experience in a mutual exchange is that party's legal:

A) detriment.
B) exchange.
C) accord.
D) release.

Question 32

Sally's grandmother, Laura, promised in her will to make Sally an heir to her home if she would move into Laura's home and care for her. Sally agreed to this and moved into Laura's home. But when Laura died, her will named Bob, a family friend, as heir to her home. Is Sally legally entitled to the home?

A) Yes, helping her grandmother provided consideration.
B) No, Sally just had a duty to help her grandmother.
C) Yes, Sally was legally closer to her grandmother than Bob.
D) No, Laura may write her will however she wishes.

Question 33

____________ is a legal doctrine that restricts a party from denying that a promise was made under certain conditions, even though consideration has not been exchanged to bind an agreement.

A) Statutes of limitations
B) Promissory estoppel
C) Locus sigilli
D) Accord and satisfaction

Question 34

In terms of disputed amounts, satisfaction is the:

A) legal term used to describe the sacrifice that each contracting party must experience.
B) implied acceptance of less than what has been billed to the debtor.
C) performance of the accord.
D) express acceptance of less than what has been billed to the defaulter.

Question 35

While the Washington family was gone for the weekend, their home was broken into and robbed. Manny, a professional boxer who lived next door, saw the thief, apprehended him, and forced him to return the stolen possessions. When the Washingtons returned, Mr. Washington told Manny that he would give him $5,000 for his efforts. The next morning, Mr. Washington gave Manny a check for $2,000. What result?

A) Mr. Washington broke his contract with Manuel.
B) Manny would lose if he brought a suit against Mr. Washington because Manny's actions would be a past consideration.
C) The bargained-for-agreement obligated Mr. Washington to pay the boxer $5,000.
D) Mr. Washington would lose if Manny brought a suit against him to recover the amount based on promissory estoppel.

Question 36

Oralia agrees to babysit Avery's daughter "when I can" if Avery promises to clean Oralia's house every week. This agreement is ____________ because it is based on a(n) ____________.

A) enforceable; option contract
B) enforceable; future gift
C) unenforceable; promissory estoppel
D) unenforceable; illusory promise

Question 37

A written promise not to sue is commonly called a:

A) consideration.
B) forbearance.
C) detriment.
D) release.

Question 38

A(n) ____________ is an acceptance of an agreement not to sue supported by consideration, which terminates one's right to continue any lawsuit, presently or in the future, on grounds described in the agreement.

A) accord and satisfaction
B) release
C) option
D) promissory estoppel

Question 39

Linda calls a cab in the morning to get to work. The fare that Linda would pay to the cab is a(n) ____________ for the ride to work.

A) exchange
B) donation
C) consideration
D) conversion

Question 40

Monty quit his $150,000 annual salary job with Computer Associates in Monterey, California, and moved with his family to Fairfield, Connecticut based upon an oral promise by Software Power to provide reimbursement of all moving expenses and at least three years employment at an annual salary of $250,000 per year. One month after moving, and before being reimbursed for moving, Monty's employment with Software Power is terminated due to a reduction in force caused by lower-than-expected product sales. Can Monty successfully sue Software Power?

A) No, since the promise was oral.
B) Yes, under promissory estoppel.
C) No, since a promise of employment is always subject to market conditions.
D) Yes, but only for the moving expenses that Monty can prove he incurred.

Question 41

Sarah promises to give $10,000 for the construction of Save the Butterflies, a local charity, and is publicly honored as a "golden" donor of Save the Butterflies, by putting her name on the "Wall of Honor." Sarah later does not pay the $10,000. Discuss the ways in which Save the Butterflies may legally collect the $10,000 from Sarah.

Question 42

Mitchell owed the National Medical Federation $250 for books he had purchased from that organization. He sent the federation a check for $100, writing on the check, "In full payment for the books I purchased." The federation cashed the check, but continued to demand the $150 balance. Discuss if the federation was within its rights to do so and whether the federation's actions reflect an accord and satisfaction agreement with Mitchell.

Question 43

Andrew's neighbor, Charles, is selling drugs from his home. Since Andrew is concerned about the well-being of his own family, he offers to pay Charles $60,000 to stop selling drugs. Charles stops, but Andrew refuses to pay. Can Charles successfully sue Andrew to force him to pay the $60,000? Explain.

Question 44

Matrix, Inc. is considering opening a restaurant in Smallville and has located a prime vacant land location that is for sale. Matrix wants to do some market research and obtain financing for construction before purchasing the land, but is concerned that a competitor, Zion, Inc., will purchase the land if Matrix does not act immediately. What legal steps should Matrix take, short of purchasing the land now, to prevent Zion from acting before them? Explain.

Question 45

Pantia agreed to write software codes for "a reasonable price" for a video game being produced by Mindbinder, Inc. When Pantia submitted a bill for $5,000, Mindbinder believed that a reasonable amount for the work was $3,000 and sent Pantia a check for that amount with a notation on the check, "Payment in full." Discuss the case.

Question 46

Jackie borrowed $1,000 from Uncle John in 1975, with repayment due in 1977. Jackie never repays the loan, and Uncle John never attempts to collect it. In 2004, Jackie writes Uncle John a letter stating that she is sorry that she did not repay the debt and encloses a check for $100 toward repayment. Uncle John cashes the check. He dies of a heart attack one week later. Uncle John's heirs find the letter and sue Jackie to collect the remaining $900 balance. Analyze the case.

Question 47

State laws known as ____________ limit the time within which a party is allowed to bring suit to collect a debt.

A) promises not to sue
B) charitable pledges
C) option contracts
D) statutes of limitation

Question 48

The ____________ Directives, also known as the ____________ Principles, guarantee the rights of European citizens while, at the same time, ensuring the smooth exchange of data among those nation-states that honor the privacy and data protection standards themselves.

A) Encrypted Cloud Data; Consumer Safe Harbor
B) EU Identify Theft and Deterrence; Debtor Safe Harbor
C) EU Data Protection and Privacy; Safe Harbor
D) EU PRISM; Safe Harbor

Question 49

Mullroy has complained to the local police about the vandalism in his neighborhood. However, the police have taken little interest in curbing the vandalism, much to Mullroy's disappointment. Determined to resolve the problem, Mullroy invites the local sheriff to his daughter's birthday party and offers him free weekend dinners at Mullroy's family restaurant if the sheriff promises to look into the vandalism problem. Discuss the nature of consideration and contract in this case.

Question 50

Tim's mother was concerned that Tim would develop cancer if he used tobacco, so she promised Tim $10,000 if he would refrain from any use of tobacco until age 30. Tim did so, but his mother refused to give him the $10,000. Does Tim have a legal right to the $10,000? Explain.

Question 51

Sergie orally agrees to pay Zenith Finance Co. a $300 loan debt that was discharged in bankruptcy after Zenith told Sergie that repaying the debt would help him "rebuild his credit", since Zenith would report his payments to credit reporting agencies. Discuss the case.

Question 52

Teller agreed to buy a stolen piano from Luthor, but failed to live up to his part of the deal. Does Luthor have a legitimate cause of action against Teller? Explain.