Deck 13: Consideration

Question 1

With respect to consideration, a bargained-for exchange refers to the location, such as a stock exchange, where the contracting parties negotiated their deal.

Answer 1

False

Question 2

To pay on receipt of certain goods is "something of legally sufficient value."

Answer 2

True

Question 3

A preexisting duty may be imposed by law.

Answer 3

True

Question 4

Painting a garage can constitute "something of legally sufficient value."

Question 5

Consideration is the value given in return for a promise or in return or a performance.

Question 6

Normally, a court will evaluate the adequacy of consideration based solely on the comparative value of the things exchanged as part of agreement.

Question 7

Adequacy of consideration refers to "how much" consideration is given.

Question 8

Providing accounting services is "something of legally sufficient value."

Question 9

Situations in which agreements lack consideration include those involving a preexisting duty.

Question 10

A preexisting duty may arise out of a previous contract.

Question 11

Consideration must provide the basis for the bargain struck between contracting parties.

Question 12

A promise to do something that one has no prior legal duty to do is not legally sufficient consideration.

Question 13

To be legally sufficient, consideration must be something of value in the eyes of the law.

Question 14

The elements of consideration, in a bilateral contract for a sale of goods, are the sale and the goods.

Question 15

Shockingly inadequate consideration can indicate fraud in a contract.

Question 16

Consideration refers to the objective determination of how much a bargain is worth.

Question 17

To enforce a contractual promise, there must be an exchange of consideration underlying the bargain.

Question 18

In general, courts question the adequacy of consideration.

Question 19

The performance of an action that one is not otherwise obligated to undertake is not legally sufficient consideration.

Question 20

Consideration refers to one party's assessment of the other party to a contract.

Question 21

Ann's Sandwich Shop and Bob's Coffee Bar are adjacent businesses. Ann, whose small shop has little room for her customers to sit, offers Bob a discount on purchases if he will allow her customers to sit at the tables on the sidewalk in front of his store. Bob's forbearance from asking Ann's customers not to use his tables is legally sufficient consideration

A)because Bob has a legal right to restrict the use of his tables.
B)because Ann's customers will undoubtedly use Bob's tables.
C)because Ann's small shop has little room for her customers to sit.
D)under no circumstances.

Question 22

With respect to consideration, the application of the rule regarding preexisting duty is meant to prevent extortion.

Question 23

If a party is already bound by contract to perform a certain duty, that duty can serve as consideration for a second contract.

Question 24

When the doctrine of promissory estoppel is applied, the promisor is estopped, or barred, from performing the promise.

Question 25

Key promises to pay Liv, his niece, $5,000 if she obtains her degree at Metro College, where she is in her third year. Liv graduates. Key must pay because

A)Liv was already enrolled at Metro.
B)obtaining a degree benefits Liv.
C)a job can be hard to find after college.
D)Liv obtained a degree at Metro.

Question 26

An accord and satisfaction is an agreement in which one party gives up the right to pursue a legal claim against another party.

Question 27

A promise made in return for an act or event that has already taken place is fully enforceable.

Question 28

A release enables recovery beyond that specified in its terms.

Question 29

If a debt is liquidated, an accord and satisfaction cannot take place.

Question 30

Forfeiting a right to sue to recover further damages can constitute consideration.

Question 31

To apply the doctrine of promissory estoppel in a given situation, there must exist no clear or definite promise.

Question 32

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 33

A promise is illusory when its performance depends solely on the discretion of the promisor.

Question 34

A promise to pay a previous debt barred by a statute of limitations can be enforced without consideration.

Question 35

An option to cancel the performance of a contract before it begins does not make the promise illusory.

Question 36

Sports Bar and Tasty Tacos are adjacent businesses with adjoining parking lots. Sports Bar offers Tasty a discount on purchases if the restaurant will not tow the cars of Sports Bar's patrons who park in the restaurant's lot. The discount is legally sufficient consideration

A)because it is a promise of something of value.
B)because on acceptance, it will become a preexisting duty.
C)because the offeror considers it to be adequate.
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

Exceptions to the preexisting duty rule include rescission.

Question 39

Two parties can mutually agree to rescind a contract only to the extent that it has been executed-otherwise, there is nothing to rescind.

Question 40

Exceptions to the preexisting duty rule include unforeseen difficulties.

Question 41

Cindy, a real estate agent, sells her friend Doug's house without charging a commission. In return, Doug promises to give Cindy $1,000. This promise is not an enforceable contract because

A)the house has already been sold-the consideration is past.
B)selling the house was the agent's preexisting duty.
C)selling the house was a foreseen difficulty.
D)the promise of a payment of $1,000 is illusory.

Question 42

A fire threatens to engulf a commercial building in Middletown. The building's owner promises a cash reward to the Middletown Fire Department to extinguish the blaze. The firefighters cannot claim the reward because

A)extinguishing the fire is the firefighters' preexisting duty.
B)extinguishing the fire represents past consideration.
C)extinguishing the fire is a foreseen difficulty.
D)the promise of a cash reward is illusory.

Question 43

Fritz offers to buy a guitar owned by Holle for twice what she paid for it. She accepts and hands the guitar to Fritz. Holle's delivery of the guitar is

A)not consideration because its adequacy is unfair.
B)not consideration because the exchange is not a bargain.
C)consideration.
D)not consideration because the value is not legally sufficient.

Question 44

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 45

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 is an illusory promise.

Question 46

Under a contract with Soy Farms, Tai begins grading a terraced hillside for planting. Halfway through the project, Tai asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." The farm agrees but later refuses to pay. The agreement to pay more is

A)unenforceable because Tai's performance was a preexisting duty.
B)unenforceable because the farm's promise was illusory.
C)enforceable.
D)unenforceable because Tai's request modified the contract.

Question 47

EcoEnergy LLC files a suit against Fiber Optics Inc., claiming that the consideration for their contract is inadequate-that the plaintiff will not realize sufficient financial benefit from the deal to make it worthwhile. Most likely, the court will

A)evaluate the fairness of the bargain.
B)ask "how much" consideration was given.
C)not question the adequacy of consideration.
D)not determine whether consideration was exchanged.

Question 48

Holes Inc. begins digging a foundation at a construction site for Investment Company under a contract for a certain price. After six months, Holes demands a higher price because of extraordinary difficulties that were totally unforeseen at the time the contract was formed. An agreement to pay the higher price is

A)enforceable as the consideration is past.
B)enforceable due to unforeseen difficulties.
C)unenforceable as an illusory promise.
D)unenforceable due to the preexisting duty rule.

Question 49

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 50

Si promises to pay his personal assistant Tery $50,000 in consideration of the services she provided over the years. Si never makes the payment. Si's promise is

A)enforceable for the entire $50,000.
B)enforceable to the extent of what Tery'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 51

Bistro Caterers contracts with Corporate Towers to cater the firm's business meetings. Later, the contract between Bistro and Corporate is completely rescinded. Even later, Bistro offers to make a new deal. Corporate is willing to deal, but for a new price. Bistro and Corporate

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 52

Kris buys Liz's house for $300,000, which is the fair market value of the house. If the contract is later disputed in court, the court is likely to declare Kris's consideration

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

Question 53

Expo Center Inc. and Festival Music LLC have an executory contract. They agree to rescind it and simultaneously enter into a new contract. If the previous contract was subject to a preexisting duty, the new contract will most likely be

A)invalid.
B)enforceable.
C)valid.
D)voidable.

Question 54

Ros contracts with Spicy Pizza to deliver its products. After the deal has been partially performed, both parties inform each other that they would like to cancel the contract. Ros and Spicy may rescind

A)their entire contract.
B)their contract to the extent that it is executory.
C)none of their contract.
D)their contract to the extent that it has been executed.

Question 55

Raj defends against a breach-of-contract suit by Student Loan Corporation by claiming that their deal-a student loan-was unfair because the consideration for the contract was inadequate. With respect to Raj's defense, the court will most likely rule in favor of the lender on the ground that

A)Raj promised to do something that he had no prior legal duty to do.
B)Raj performed an act that he was not otherwise obligated to undertake.
C)Raj refrained from an act that he had a legal right to undertake.
D)the adequacy of the consideration is not for the court to determine.

Question 56

Onsite Restoration Inc. begins renovating houses for Property Company under a contract for a stated amount per house. After six months, Onsite demands an extra $20,000 per house, stating no reason for the extra $20,000, but asserting that it will stop work if it is not paid. The agreement is

A)enforceable as the consideration is past.
B)enforceable due to unforeseen difficulties.
C)unenforceable as an illusory promise.
D)unenforceable due to the preexisting duty rule.

Question 57

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

Question 58

Sol offers Tiff $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 59

National Trucking Company begins transporting crude for Oil Inc. under a contract for a stated amount per load. After six months, National demands an increase in the stated amount because ordinary business expenses have increased. Oil's agreement to pay the increased amount is

A)enforceable as the consideration is past.
B)enforceable due to unforeseen difficulties.
C)unenforceable as an illusory promise.
D)unenforceable due to the preexisting duty rule.

Question 60

Apps Inc. promises to give stock options to Belden, a creative coder, for processes he has already designed. This promise is

A)enforceable because it is a new contract.
B)enforceable because it is an illusory promise.
C)enforceable because it is supported by past consideration.
D)unenforceable.

Question 61

Buck and Cady are in an auto accident. Buck offers Cady $20,000 for her promise not to pursue a legal claim against him arising out of the accident. Cady agrees. This agreement is

A)past consideration.
B)an illusory promise.
C)a release.
D)promissory estoppel.

Question 62

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

A)enforceable.
B)unenforceable because Jolie'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

Cloud Storage 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)accord and satisfaction.
D)past consideration.

Question 64

Don slips and falls on a patch of ice on Ella's property. Ella offers Don $10,000 if he promises not to pursue any slip-and-fall legal claim against her. Don agrees, but later discovers that it will cost $40,000 in medical expenses for a latent injury. In Don's suit against Ella, Don will most likely recover

A)$30,000 to pay the costs over what Ella already paid Don.
B)nothing.
C)the estimated amount to pay the costs and any other liability.
D)the exact amount to pay the costs and no more.

Question 65

Gwen is indebted to Home Loan Company for $75,000. Gwen agrees to pay, and Home Loan agrees to accept, a lesser amount than the lender originally claimed was owed. The performance of this agreement is

A)an accord.
B)a release.
C)a satisfaction.
D)an illusory promise.

Question 66

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?

Question 67

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 68

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 69

Etan is indebted to Finance Credit Corporation for $100,000. Etan agrees to pay, and Finance Credit agrees to accept, a lesser amount than the creditor originally claimed was owed. This agreement is

A)an accord.
B)a release.
C)a satisfaction.
D)an illusory promise.

Question 70

Dore's Aunt Em tells her, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." Em's promise is

A)illusory.
B)enforceable.
C)a forbearance.
D)a preexisting duty.

Question 71

Recovery of Bud's debt to Credit Corporation is barred by a statute of limitations when Bud makes a partial payment. The creditor

A)needs new consideration to recover more than the partial payment.
B)can sue to recover the entire debt without consideration.
C)is estopped from asserting a right to recoup the rest of the debt.
D)can obtain no more on the debt due to the statute of limitations.

Question 72

Marketing Solutions Inc. promises to employ Niki as a software engineer. In reliance on the promise, Niki quits her job with Online Ad Agency, but Marketing Solutions does not hire her. Most likely, Marketing Solutions is

A)liable to Niki under the concept of rescission.
B)liable to Niki under the doctrine of promissory estoppel.
C)liable to Niki under the preexisting duty rule.
D)not liable to Niki.