Deck 9: Introduction to Contracts and Agreement

Question 1

An illusory promise is not consideration.

Answer 1

True
Explanation: An illusory promise is not consideration.

Question 2

Partial payment of a debt may or may not be valid consideration, depending on whether the debt is liquidated or unliquidated.

Answer 2

True
Explanation: Partial payment of a debt may or may not be valid consideration, depending on whether the debt is liquidated or unliquidated.

Question 3

An exception to the rule requiring consideration is promissory estoppel.

Answer 3

True
Explanation: One exception to the rule requiring consideration is promissory estoppel.

Question 4

What did the court in the case in the text, Labriola v. Pollard Group, Inc., rule regarding whether the noncompete agreement at issue in the case was enforceable?

A) The court ruled that the noncompete agreement was enforceable because the employee received independent consideration for it in the form of increased wages.
B) The court ruled that the noncompete agreement was enforceable because the employee received independent consideration for it in the form of a fixed term of employment.
C) The court ruled that the noncompete agreement was enforceable because the employee received independent consideration for it in the form of a promotion.
D) The court ruled that the noncompete agreement was unenforceable because the employee did not have sufficient education to understand it.
E) The court ruled that the noncompete agreement was not enforceable because of a lack of consideration.

Question 5

Which of the following are examples of consideration?

A) A benefit to the promisor but not a detriment to the promissee.
B) A detriment to the promisee but not a benefit to the promisor.
C) A promise to do something, a benefit to the promisor, or a detriment to the promisee.
D) An accepted offer.
E) A valid counteroffer.

Question 6

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

Question 7

Which of the following occurs when one party makes a promise knowing the other party will rely on it, the other party does rely on it, and the only way to avoid injustice is to enforce the promise?

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

Question 8

In a bilateral contract, the consideration for a promise is a completed act.

Question 9

Which of the following 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 an item was sold for a low sum in order to avoid claims of creditors.

Question 10

Which of the following is what a person will receive in return for performing a contractual obligation?

A) Consideration
B) Acknowledgement
C) Approval
D) Accord
E) Accession

Question 11

Which of the following consists of something of value given to another party in exchange for something else of value?

A) Consideration.
B) Acknowledgement.
C) Approval.
D) Discharge.
E) Accession.

Question 12

Consideration is optional in every contract.

Question 13

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 14

Past consideration, as a rule, qualifies as consideration.

Question 15

An unliquidated debt may be the subject of an accord and satisfaction.

Question 16

In a bilateral contract, the consideration for each promise is _____________.

A) A completed act.
B) The beginning of action in acceptance, even if it is not complete.
C) An acknowledgement.
D) A return promise.
E) An agreement.

Question 17

In Japan a promise to give property to one party gratuitously cannot be cancelled, regardless of whether or not it is in writing.

Question 18

The UCC permits requirement, but not output, contracts for the sale of goods.

Question 19

Which of the following would not be considered an example of consideration?

A) A promise to stay in a job until a particular project is completed.
B) A promise to your football coach to refrain from riding your motorcycle during football season even though you love riding it.
C) A promise to cook dinner for your roommate for the next six months.
D) A promise to stop drinking alcohol during exam week.
E) A promise to pay your employees as required by law.

Question 20

In a unilateral contract, the consideration for a promise is _____________.

A) An Act.
B) A return promise.
C) An acknowledgement.
D) A Consideration.
E) An agreement.

Question 21

Which of the following is true of a requirements contract under common law?

A) It is valid so long as there is a writing setting forth the terms signed by the offeror.
B) It is valid so long as there is a writing setting forth the terms signed by the offeree.
C) It is valid so long as there is a writing setting forth the terms signed by the offeror and the offeree.
D) It is valid so long as more than nominal consideration is provided.
E) It is not valid because of the lack of consideration.

Question 22

Laura, who has a dress shop, likes a certain style of dress and reaches an agreement with ABC Co., the designer and manufacturer of the dress, that she will purchase all the dresses of that style that ABC Co. can produce for $100 each. Later, ABC Co. learns of Sam, Laura's competitor, who is willing to pay double what Laura agreed to pay for the dresses. ABC Co., attempts to avoid the agreement with Laura on the basis that the agreement with Laura was vague and that consideration was lacking. Which of the following is the most likely result?

A) Laura will win on the basis of promissory estoppels.
B) Laura will win because she had a valid output contract.
C) Laura will win because she had a valid requirement contract.
D) ABC Co. will win because the contract with Laura was insufficiently vague.
E) ABC Co. will win so long as Laura was given sufficient notice of its decision to enable her to obtain dresses from some other manufacturer.

Question 23

Sam offers Betty his bicycle for $75. Which of the following is an example of an illusory promise on the part of Betty?

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 24

Which of the following is true of an output contract under common law?

A) It is valid so long as there is a writing setting forth the terms signed by the offeror.
B) It is valid so long as there is a writing setting forth the terms signed by the offeree.
C) It is valid so long as there is a writing setting forth the terms signed by the offeror and the offeree.
D) It is valid so long as more than nominal consideration is provided.
E) It is not valid because of the lack of consideration.

Question 25

Which of the following is true regarding illusory promises?

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

Question 26

Courtney, who does not keep up with the price of current technology, agrees to buy a used computer from Jake for $2,500. Later, Brice tells Courtney that she made a really bad deal and that she could get an even better new computer for no more than $1,000. Courtney tells Jake that she is not giving him any money because he was not fair with her. Which of the following is the most likely result if Jake sues Courtney alleging breach of contract?

A) Brice will win only if he can establish that Brice is wrong and that the deal was actually reasonable.
B) Brice will win because the court would not weigh whether a good bargain was made.
C) Courtney will win if she can establish that she paid at least 75% more than the computer was actually worth.
D) Courtney will win if she can establish that she paid at least 50% more than the computer was actually worth.
E) Courtney will win if she can establish that she made a bad deal and that truly she was not aware of current prices of computers.

Question 27

In the case of Smith v. Riley, referenced in the text, what did the court rule in regard to whether a purchase in the amount of "the sum of One Dollar ($1.00) and other good and valuable consideration" was sufficient consideration to support an agreement?

A) The Court ruled that the purchase amount was sufficient consideration.
B) The Court ruled that the purchase amount was insufficient consideration only because the sale of an interest in a lease was involved.
C) The Court ruled that the purchase amount was insufficient consideration only because a sale of goods was involved.
D) The Court ruled that the purchase amount was insufficient consideration only because a domestic partnership was involved.
E) The Court ruled that the purchase amount was insufficient consideration because over $50,000 was at issue.

Question 28

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

A) The stylist will win because she did additional work in exchange for the extra payment and, therefore, Sally'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 Sally 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) Sally will win because the stylist had a preexisting duty to have her hair looking as good as possible.
E) Sally will win because there was no valid consideration in exchange for the highlighting.

Question 29

Yolanda agrees to bathe and groom Wendy's dog, Fluffy, for $20. Yolanda agreed to the price before seeing Fluffy, a very plump, grouchy Pembroke Welsh Corgi dog with lots of hair. Yolanda tells Wendy that if she is going to groom Fluffy, the price will be $30. Wendy agrees although noting that the dog is named "Fluffy." Yolanda bathes and grooms Fluffy, but Wendy will only pay $20. Which of the following is correct regarding Yolanda's entitlement to the extra $10?

A) Yolanda is entitled to the extra $10 because a valid bilateral contract existed.
B) Yolanda is entitled to the extra $10 because a valid unilateral contract existed.
C) Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy for $20.
D) Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because Wendy's promise to pay $30 was illusory.
E) Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because past consideration was involved.

Question 30

Which of the following is true regarding past consideration?

A) It is not consideration that will support a binding contract.
B) It is consideration that will support a binding contract.
C) It is consideration that will support a binding contract only in the employment context.
D) It is consideration that will support a binding contract only in the context of the provision of services.
E) It is consideration that will support a binding contract only in the restaurant industry.

Question 31

A[n] _____________ contract is an agreement whereby the buyer agrees to purchase all his goods from one seller.

A) Supply
B) Use
C) Requirement
D) Output
E) Arranged

Question 32

A[n] _____________ contract is an agreement whereby the seller guarantees to sell everything she produces to one buyer.

A) Supply
B) Use
C) Requirement
D) Output
E) Arranged

Question 33

Under Article _____________ of the UCC, an agreement modifying a contract needs no consideration to be binding.

A) One
B) Two
C) Three
D) Five
E) None of these. There is no such rule in the UCC.

Question 34

For a court to enforce a promise, _____________ must offer consideration.

A) Only the offeror.
B) Only the offeree.
C) Only the acceptee.
D) The offeree and acceptor.
E) The offeror and offeree.

Question 35

Mary has a pet shop and verbally orders 50 packages of dog food for puppies from a supplier for a total cost of $1,000. Later she calls the supplier and changes the order to food for adult dogs. When 50 packages of puppy food arrive, Mary complains. The supplier tells her that the modification was not valid because nothing was put in writing. Which of the following is the correct resolution of the dispute?

A) The supplier is correct because modification of orders of over $200 must be in writing.
B) The supplier is correct because modification of orders of over $500 must be in writing.
C) The supplier is correct because modification of orders of over $600 must be in writing.
D) The supplier is correct because modification of orders of over $800 must be in writing.
E) Mary is correct because under the circumstances, there was no requirement of a writing to modify the agreement.

Question 36

Which of the following is true of a requirement contract under the UCC?

A) It is valid so long as the requirement is made in good faith.
B) It is valid so long as there is a writing setting forth the terms signed by the offeree.
C) It is valid so long as there is a writing setting forth the terms signed by the offeror and the offeree.
D) It is valid so long as more than nominal consideration is provided.
E) It is not valid because of the lack of consideration.

Question 37

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

A) Valid consideration because it is illusory consideration.
B) Valid consideration only in the employment context.
C) Valid consideration because it is past consideration.
D) Valid consideration only if a sale of goods is involved.
E) Not valid consideration.

Question 38

Which of the following are reasons for disregard of the preexisting-duty rule?

A) Unforeseen circumstances only.
B) Additional work only.
C) Past consideration only.
D) Unforeseen circumstances and additional work, but not past consideration.
E) Unforeseen circumstances, additional work, and past consideration.

Question 39

Sam, who has a retail clothing store, orders 50 white shirts from XYZ manufacturer. He later calls a representative of XYZ and requests that blue shirts be sent instead. The representative agrees. Sam gets white shirts and complains. The XYZ representative says that blue shirts are more expensive because they are in greater demand and that there was no consideration for the modification to the contract. Which of the following is the correct resolution of the dispute?

A) Sam is correct because under the UCC no additional consideration was needed.
B) Sam is correct because a valid unilateral contract existed.
C) The XYZ representative is correct because no additional consideration was provided.
D) The XYZ representative is correct because no valid bilateral contract existed.
E) The XYZ representative is correct both because no additional consideration was provided and because no valid bilateral contract existed.

Question 40

Which of the following was the result in Mast Long Term Care v. Forest Hills Rest Home, the case in the text in which the plaintiff claimed that the defending rest home breached its agreement to buy from the plaintiff all the drugs needed for its patients that were not commonly stocked at the rest home?

A) That the agreement was not a valid contract because it contained vague purchasing terms.
B) That the agreement was not valid because it was an illusory promise.
C) That the agreement was not valid because it was unliquidated.
D) That the agreement was valid based on promissory estoppels.
E) That the agreement was valid as a requirement contract.

Question 41

Reference - Garage sale. Richard, who is cleaning out his garage, offers to sell Dawn a used computer for $200. Dawn replies that "I'll think about it and buy it if I decide to do so." Richard also calls Denise and offers to give Denise a used business law book. She is excited to receive the book and tells him that she will pick it up the next day. Richard also agrees to sell a communications book for $50 to Jill who promises to pick it up the next day. Meanwhile, Sam comes to visit, offers Richard $20 for the business law book and Richard sells it to him. Sam also offers Richard $50 for the used computer. Richard sells it to Sam because he does not expect to hear from Dawn. Sam sees the communications book and offers Richard $60 for it. Richard decides to forget about Jill and proceeds to sell the book to Sam for $60. Denise is very angry because Richard did not save the book for her and claims that he breached a contract because she had accepted his offer. Jill is also angry because Richard sold the communications book and informs him that he breached the contract he had with her. Exactly 31 days later, Dawn tells Richard that she would like the computer. She tells him that her response constituted consideration in that it bound him to an option contract and that he should have awaited her final decision. Richard tells Sam that he needs to return everything for a full refund. Sam refuses. Which of the following is true regarding Denise's claim that Richard breached a contract with her because Richard did not save the book for her after she had accepted his offer?

A) Denise is correct, and Richard breached a contract he had with her.
B) Denise is correct only if she can show that she had given past consideration in other dealings with Richard.
C) Denise is correct only if she can show that Richard did not really need the money.
D) Denise is incorrect because her acceptance was illusory.
E) Denise is incorrect because she did not provide any consideration.

Question 42

When an accord and satisfaction is at issue, the _____________ is the payment, by the debtor, of the reduced amount.

A) Satisfaction
B) Accord
C) Both satisfaction and accord
D) Fund transfer
E) Bond

Question 43

In a[n] _____________ debt, there is no dispute about the fact that money is owed and the amount of money owed.

A) Actual
B) Acknowledged
C) Certain
D) Liquidated
E) Unliquidated

Question 44

In a[n] _____________ debt, the parties either dispute the fact that any money is owed or agree that some money is owed but dispute the amount.

A) Disputed
B) Unacknowledged
C) Uncertain
D) Liquidated
E) Unliquidated

Question 45

Reference - Garage sale. Richard, who is cleaning out his garage, offers to sell Dawn a used computer for $200. Dawn replies that "I'll think about it and buy it if I decide to do so." Richard also calls Denise and offers to give Denise a used business law book. She is excited to receive the book and tells him that she will pick it up the next day. Richard also agrees to sell a communications book for $50 to Jill who promises to pick it up the next day. Meanwhile, Sam comes to visit, offers Richard $20 for the business law book and Richard sells it to him. Sam also offers Richard $50 for the used computer. Richard sells it to Sam because he does not expect to hear from Dawn. Sam sees the communications book and offers Richard $60 for it. Richard decides to forget about Jill and proceeds to sell the book to Sam for $60. Denise is very angry because Richard did not save the book for her and claims that he breached a contract because she had accepted his offer. Jill is also angry because Richard sold the communications book and informs him that he breached the contract he had with her. Exactly 31 days later, Dawn tells Richard that she would like the computer. She tells him that her response constituted consideration in that it bound him to an option contract and that he should have awaited her final decision. Richard tells Sam that he needs to return everything for a full refund. Sam refuses. Which of the following best describes Dawn's statement that she would think about it and buy the computer if she decided to do so?

A) It is an illusory promise.
B) It is a valid promise.
C) It is a promise sufficient to require Richard to consult with her prior to selling the computer to someone else.
D) It is a promise sufficient to require Richard to consult with her prior to selling the computer to someone else, but only for 30 days.
E) It is a real promise.

Question 46

Which of the following is true regarding a valid 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 under the original agreement.
C) When amounts agreed upon are paid, the debt is fully discharged except for any interest due under the original agreement.
D) When amounts agreed upon are paid, the debt is fully discharged except for any late charges and any interest due under the original agreement.
E) When amounts agreed upon are paid, the debt is fully discharged except for any late charges or interest due under the original agreement, or for attorney fees of the creditor that are due.

Question 47

Which of the following is true regarding whether an accepted offer to satisfy a debt by paying only part 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 only if a liquidated or unliquidated debt is involved.

Question 48

Reference - Alien babies. Toymaker Alice came out with a doll that looked like a baby alien. Alice initially had trouble selling the doll to retailers even after offering retailers a contract by which they could buy all the dolls they needed for $10. Slick Eddie, however, who had a retail toy store, signed the agreement, whereby he could buy all the dolls he needed for $10. Slick Eddie had a toy store but did very little business because he was so sleazy. Parents wanted to keep kids out. After a few months, the baby alien doll was a surprise hit and every child wanted one. Slick Eddie, however, did not see much demand in his store because, regardless of whether he had alien baby dolls or not, parents disliked him. When demand grew, Alice raised to $40 per doll the price charged to retailers who had not signed a contract to purchase all the dolls they needed for $10. Slick Eddie decided to purchase alien dolls for $10 from Alice and then resell them for $35 to a retailer, Ben, who did not have a contract with Alice to purchase the dolls for $10. His contract with Ben required that he also gift wrap the dolls and that he would provide Ben with all the gift-wrapped dolls he could produce. Eddie then ordered 10,000 alien baby dolls from Alice. When Alice figured out what was happening, sales of alien baby dolls to Slick Eddie were stopped. What type of contract did Slick Eddie have with Alice?

A) Requirement.
B) Output.
C) Executed.
D) Both requirement and output.
E) Requirement, output, and executed.

Question 49

Which of the following is true of an output contract under the UCC?

A) It is valid so long as the output is made in good faith.
B) It is valid so long as there is a writing setting forth the terms signed by the offeree.
C) It is valid so long as there is a writing setting forth the terms signed by the offeror and the offeree.
D) It is valid so long as more than nominal consideration is provided.
E) It is not valid because of the lack of consideration.

Question 50

Reference - Alien babies. Toymaker Alice came out with a doll that looked like a baby alien. Alice initially had trouble selling the doll to retailers even after offering retailers a contract by which they could buy all the dolls they needed for $10. Slick Eddie, however, who had a retail toy store, signed the agreement whereby he could buy all the dolls he needed for $10. Slick Eddie had a toy store but did very little business because he was so sleazy. Parents wanted to keep kids out. After a few months, the baby alien doll was a surprise hit and every child wanted one. Slick Eddie, however, did not see much demand in his store because, regardless of whether he had alien baby dolls or not, parents disliked him. When demand grew, Alice raised to $40 per doll the price charged to retailers who had not signed a contract to purchase all the dolls they needed for $10. Slick Eddie decided to purchase alien dolls for $10 from Alice and then resell them for $35 to a retailer, Ben, who did not have a contract with Alice to purchase the dolls for $10. His contract with Ben required that he also gift wrap the dolls and that he would provide Ben with all the gift-wrapped dolls he could produce. Eddie then ordered 10,000 alien baby dolls from Alice. When Alice figured out what was happening, sales of alien baby dolls to Slick Eddie were stopped. What type of contract did Slick Eddie have with Alice?

A) Requirement
B) Output
C) Executed
D) Both requirement and output
E) Requirement, output, and executed

Question 51

Which of the following represents a valid accord and satisfaction?

A) When a dispute over an unliquidated debt is settled and paid for less than the full amount.
B) When a dispute over a liquidated debt is settled and paid for less than the full amount.
C) When a dispute over an unliquidated debt is settled and paid for the full amount.
D) When a dispute over a liquidated debt is settled and paid for the full amount.
E) When a dispute over either an unliquidated or liquidated debt is settled and paid for less than the full amount.

Question 52

Reference - Bank Robbery. Safe Bank was robbed of a significant sum of cash by Victor. Safe Bank offered a reward of $10,000 for anyone who captured or provided information leading to the capture of Victor. Ted, a police officer in town, promised Safe Bank officials that he would apprehend Victor. While on duty, Ted arrested Victor at a hamburger joint in town. He found Victor based upon a hunch he had after Ursula, who dated Victor, told him about various places Victor enjoyed eating. The bank refuses to pay either Ursula or Ted any of the reward money. In a lawsuit between the bank and Ted, regarding the reward funds, who is likely to prevail and why?

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

Question 53

Reference - Bank Robbery. Safe Bank was robbed of a significant sum of cash by Victor. Safe Bank offered a reward of $10,000 for anyone who captured or provided information leading to the capture of Victor. Ted, a police officer in town, promised Safe Bank officials that he would apprehend Victor. While on duty, Ted arrested Victor at a hamburger joint in town. He found Victor based upon a hunch he had after Ursula, who dated Victor, told him about various places Victor enjoyed eating. The bank refuses to pay either Ursula or Ted 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 54

Reference - Garage sale. Richard, who is cleaning out his garage, offers to sell Dawn a used computer for $200. Dawn replies that "I'll think about it and buy it if I decide to do so." Richard also calls Denise and offers to give Denise a used business law book. She is excited to receive the book and tells him that she will pick it up the next day. Richard also agrees to sell a communications book for $50 to Jill who promises to pick it up the next day. Meanwhile, Sam comes to visit, offers Richard $20 for the business law book and Richard sells it to him. Sam also offers Richard $50 for the used computer. Richard sells it to Sam because he does not expect to hear from Dawn. Sam sees the communications book and offers Richard $60 for it. Richard decides to forget about Jill and proceeds to sell the book to Sam for $60. Denise is very angry because Richard did not save the book for her and claims that he breached a contract because she had accepted his offer. Jill is also angry because Richard sold the communications book and informs him that he breached the contract he had with her. Exactly 31 days later, Dawn tells Richard that she would like the computer. She tells him that her response constituted consideration in that it bound him to an option contract and that he should have awaited her final decision. Richard tells Sam that he needs to return everything for a full refund. Sam refuses. Which of the following is true regarding the dispute between Richard and Sam regarding whether Sam must return anything?

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

Question 55

Reference - Alien babies. Toymaker Alice came out with a doll that looked like a baby alien. Alice initially had trouble selling the doll to retailers even after offering retailers a contract by which they could buy all the dolls they needed for $10. Slick Eddie, however, who had a retail toy store, signed the agreement whereby he could buy all the dolls he needed for $10. Slick Eddie had a toy store but did very little business because he was so sleazy. Parents wanted to keep kids out. After a few months, the baby alien doll was a surprise hit and every child wanted one. Slick Eddie, however, did not see much demand in his store because, regardless of whether he had alien baby dolls or not, parents disliked him. When demand grew, Alice raised to $40 per doll the price charged to retailers who had not signed a contract to purchase all the dolls they needed for $10. Slick Eddie decided to purchase alien dolls for $10 from Alice and then resell them for $35 to a retailer, Ben, who did not have a contract with Alice to purchase the dolls for $10. His contract with Ben required that he also gift wrap the dolls and that he would provide Ben with all the gift-wrapped dolls he could produce. Eddie then ordered 10,000 alien baby dolls from Alice. When Alice figured out what was happening, sales of alien baby dolls to Slick Eddie were stopped. Will Alice be required to honor Slick Eddie's order for 10,000 alien baby dolls?

A) Yes, because Alice should have known better than to enter into the contract with Slick Eddie.
B) Yes, because it did not object to the contract with Slick Eddie within 5 days of the time it was entered into.
C) Yes, because it did not object to the contract with Slick Eddie within 10 days of the time it was entered into.
D) Yes, because she had a valid contract with Slick Eddie.
E) Probably not because it appears that Slick Eddie failed to act in good faith.

Question 56

Reference - Garage sale. Richard, who is cleaning out his garage, offers to sell Dawn a used computer for $200. Dawn replies that "I'll think about it and buy it if I decide to do so." Richard also calls Denise and offers to give Denise a used business law book. She is excited to receive the book and tells him that she will pick it up the next day. Richard also agrees to sell a communications book for $50 to Jill who promises to pick it up the next day. Meanwhile, Sam comes to visit, offers Richard $20 for the business law book and Richard sells it to him. Sam also offers Richard $50 for the used computer. Richard sells it to Sam because he does not expect to hear from Dawn. Sam sees the communications book and offers Richard $60 for it. Richard decides to forget about Jill and proceeds to sell the book to Sam for $60. Denise is very angry because Richard did not save the book for her and claims that he breached a contract because she had accepted his offer. Jill is also angry because Richard sold the communications book and informs him that he breached the contract he had with her. Exactly 31 days later, Dawn tells Richard that she would like the computer. She tells him that her response constituted consideration in that it bound him to an option contract and that he should have awaited her response. Richard tells Sam that he needs to return everything for a full refund. Sam refuses. Which of the following is true regarding Dawn's statement that her response was sufficient consideration to bind Richard to an option contract and that he should have awaited her final decision?

A) She is correct. Her statement bound him to an option contract, and he should have awaited her final decision.
B) She is incorrect in that her response bound Richard to an option contract, but she is correct that he should have awaited her final decision.
C) She is correct that her response bound Richard to an option correct, but she is incorrect that he should have awaited her final decision
D) She is correct that her statement bound him to an option contract, but he should have awaited her final decision only if she can prove that they have had significant business dealings in the past.
E) She is incorrect on both counts. Her statement did not create an option contract nor was Richard bound to await her final decision.

Question 57

Reference - Bank Robbery. Safe Bank was robbed of a significant sum of cash by Victor. Safe Bank offered a reward of $10,000 for anyone who captured or provided information leading to the capture of Victor. Ted, a police officer in town, promised Safe Bank officials that he would apprehend Victor. While on duty, Ted arrested Victor at a hamburger joint in town. He found Victor based upon a hunch he had after Ursula, who dated Victor, told him about various places Victor enjoyed eating. The bank refuses to pay either Ursula or Ted 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 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 58

When an accord and satisfaction is at issue, the _____________ is the new agreement to pay less than the creditor claims is owed.

A) Satisfaction
B) Accord
C) Both satisfaction and accord
D) Written compromise
E) Written acknowledgement

Question 59

Reference - Garage sale. Richard, who is cleaning out his garage, offers to sell Dawn a used computer for $200. Dawn replies that "I'll think about it and buy it if I decide to do so." Richard also calls Denise and offers to give Denise a used business law book. She is excited to receive the book and tells him that she will pick it up the next day. Richard also agrees to sell a communications book for $50 to Jill who promises to pick it up the next day. Meanwhile, Sam comes to visit, offers Richard $20 for the business law book and Richard sells it to him. Sam also offers Richard $50 for the used computer. Richard sells it to Sam because he does not expect to hear from Dawn. Sam sees the communications book and offers Richard $60 for it. Richard decides to forget about Jill and proceeds to sell the book to Sam for $60. Denise is very angry because Richard did not save the book for her and claims that he breached a contract because she had accepted his offer. Jill is also angry because Richard sold the communications book and informs him that he breached the contract he had with her. Exactly 31 days later, Dawn tells Richard that she would like the computer. She tells him that her response constituted consideration in that it bound him to an option contract and that he should have awaited her final decision. Richard tells Sam that he needs to return everything for a full refund. Sam refuses. Which of the following is true regarding Jill's claim that by selling the communications book for a higher price, Richard breached the contract he had with her?

A) Jill is correct.
B) Jill is correct only if she can establish that she had prior dealings with Richard.
C) Jill 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) Jill is incorrect because her acceptance was illusory.
E) Jill 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 60

Which of the following is true under the UCC regarding checks marked "paid-in-full"?

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 and 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 and 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 and 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 and avoid an accord and satisfaction.
E) The business has no recourse, and the debt is deemed discharged and satisfied.

Question 61

Do you believe that the law should be that consideration must be in an amount similar in value to the item or services being transferred in order for the contract to be enforceable? Discuss why or why not.

Question 62

Reference - Marcy's Mom. Marcy's mother, Sue, did not want her to date until she was older. She also wanted Marcy to attend law school. Just before Marcy started her freshman year in college, Sue told Marcy that if Marcy would refrain from dating until she received her law degree, then Sue would pay off all Marcy's school loans and throw in an extra $50,000. Marcy agrees and states, "Thanks, Mom, and by the way, when I graduate I'm throwing you a big party for all you've done for me!" Sue smiles and hugs Marcy. Marcy finished law school and asked for payment of her loans, the $50,000 in cash, and for a car. Sue said "No way - I know you went out on some dates during law school, and I never agreed on the car." Marcy said those were just study nights and that her mother had never objected to Marcy's frequent statements that she wanted a car upon graduation. Sue asks about the party. Marcy tells her that she is nuts because there is no way Marcy can afford a party since Sue has backed out of the deal. After some serious negotiation Marcy and Sue settled their dispute with Sue agreeing to pay for half of Marcy's school loans and for all the expenses of Marcy's upcoming wedding, and to forget about Marcy throwing a party for her. Was there sufficient consideration to support Marcy's agreement to throw a party for Sue?

A) Yes, sufficient consideration was present.
B) No, there was insufficient consideration because Sue did not promise anything in exchange.
C) No, there was insufficient consideration because Marcy's agreement was illusory.
D) No, because throwing a party is not of a monetary value such as to constitute consideration.
E) No, because close relatives are involved.

Question 63

Henry's boss, Jacob, tells him that because he has been such a valuable employee, he will receive an extra week of vacation. When Henry decides to schedule the vacation, he reminds Jacob of his statement. Jacob says that he has changed his mind and that he really cannot afford to let Henry off. Henry says that Jacob has breached the contract he had with Jacob for an extra vacation week. Who is right and why?

Question 64

Define the terms liquidated debt and unliquidated debt, and discuss when an accord and satisfaction is enforceable.

Question 65

Define and discuss promissory estoppel, and give an example of when it would be applied.

Question 66

Frank is building a home for Debby that under the original contract is to be completed by December 31^st. Debby found the plans for the home in a publication focusing on unique houses and is excited because it will be the only home of its type in the area. Because he underestimated the time needed for special and unique framing required for Debby's house, Frank tells Debby that he needs to hire additional workers in order to have the home done by that time and that she needs to pay him an extra $10,000. Debby says that she will pay. Frank finishes the home and asks for his $10,000. Debby refuses to pay. What is the likely result if Frank sues? Discuss whether you believe the result is ethical and equitable.

Question 67

Reference - Marcy's Mom. Marcy's mother, Sue, did not want her to date until she was older. She also wanted Marcy to attend law school. Just before Marcy started her freshman year in college, Sue told Marcy that if Marcy would refrain from dating until she received her law degree, then Sue would pay off all Marcy's school loans and throw in an extra $50,000. Marcy agrees and states, "Thanks, Mom, and by the way, when I graduate I'm throwing you a big party for all you've done for me!" Sue smiles and hugs Marcy. Marcy finished law school and asked for payment of her loans, the $50,000 in cash, and for a car. Sue said "No way - I know you went out on some dates during law school, and I never agreed on the car." Marcy said those were just study nights and that her mother had never objected to Marcy's frequent statements that she wanted a car upon graduation. Sue asks about the party. Marcy tells her that she is nuts because there is no way Marcy can afford a party since Sue has backed out of the deal. After some serious negotiation Marcy and Sue settled their dispute with Sue agreeing to pay for half of Marcy's school loans and for all the expenses of Marcy's upcoming wedding, and to forget about Marcy throwing a party for her. In reaching a settlement, Marcy and Sue entered into a[n] _____________.

A) Partial payment agreement
B) Promissory estoppel
C) Settlement and affiliation
D) Agreement and payment
E) Accord and satisfaction

Question 68

Reference - Marcy's Mom. Marcy's mother, Sue, did not want her to date until she was older. She also wanted Marcy to attend law school. Just before Marcy started her freshman year in college, Sue told Marcy that if Marcy would refrain from dating until she received her law degree, then Sue would pay off all Marcy's school loans and throw in an extra $50,000. Marcy agrees and states, "Thanks, Mom, and by the way, when I graduate I'm throwing you a big party for all you've done for me!" Sue smiles and hugs Marcy. Marcy finished law school and asked for payment of her loans, the $50,000 in cash, and for a car. Sue said "No way - I know you went out on some dates during law school, and I never agreed on the car." Marcy said those were just study nights and that her mother had never objected to Marcy's frequent statements that she wanted a car upon graduation. Sue asks about the party. Marcy tells her that she is nuts because there is no way Marcy can afford a party since Sue has backed out of the deal. After some serious negotiation Marcy and Sue settled their dispute with Sue agreeing to pay for half of Marcy's school loans and for all the expenses of Marcy's upcoming wedding, and to forget about Marcy throwing a party for her. What type of alleged debt was involved in the dispute between Marcy and Sue involving the school loans, additional funds, car, and party?

A) Liquidated
B) Unliquidated
C) Supported
D) Unsupported
E) Liquidated in relation to the school loans, additional funds, and car; and unsupported in relation to the party.

Question 69

Reference - Marcy's Mom. Marcy's mother, Sue, did not want her to date until she was older. She also wanted Marcy to attend law school. Just before Marcy started her freshman year in college, Sue told Marcy that if Marcy would refrain from dating until she received her law degree, then Sue would pay off all Marcy's school loans and throw in an extra $50,000. Marcy agrees and states, "Thanks, Mom, and by the way, when I graduate I'm throwing you a big party for all you've done for me!" Sue smiles and hugs Marcy. Marcy finished law school and asked for payment of her loans, the $50,000 in cash, and for a car. Sue said "No way - I know you went out on some dates during law school, and I never agreed on the car." Marcy said those were just study nights and that her mother had never objected to Marcy's frequent statements that she wanted a car upon graduation. Sue asks about the party. Marcy tells her that she is nuts because there is no way Marcy can afford a party since Sue has backed out of the deal. After some serious negotiation Marcy and Sue settled their dispute with Sue agreeing to pay for half of Marcy's school loans and for all the expenses of Marcy's upcoming wedding, and to forget about Marcy throwing a party for her. Was the agreement between Marcy and Sue that Sue would pay Marcy's school loans and throw in an extra $50,000 if Marcy refrained from dating until she received a law degree sufficiently supported by consideration?

A) Yes, sufficient consideration existed to support the agreement.
B) No, because the agreement was illusory.
C) No, because refraining from dating and going to school is not of a monetary value such as to constitute consideration.
D) No, because close relatives are involved.
E) No, because the consideration was inadequate.