Deck 10: Consideration

Question 1

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

Answer 1

True

Question 2

A preexisting duty may arise out of a previous contract.

Answer 2

True

Question 3

Legal sufficiency of consideration is distinct from adequacy of consideration.

Answer 3

True

Question 4

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

Question 5

A transaction that lacks a bargained-for exchange does not lack an element of consideration.

Question 6

Forbearance is undertaking an action that one has a legal right to undertake.

Question 7

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

Question 8

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

Question 9

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

Question 10

Parties are not usually free to bargain as they wish.

Question 11

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

Question 12

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

Question 13

Exceptions to the preexisting duty rule include rescission.

Question 14

A preexisting duty may be imposed by law.

Question 15

Consideration refers to the serious thought that underlies a party's intent to enter into a contract.

Question 16

Consideration refers to the time that a party takes to evaluate a deal.

Question 17

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

Question 18

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

Question 19

Just because a party has made a promise means the promise is enforceable.

Question 20

In general, courts question the adequacy of consideration.

Question 21

Fact Pattern 10-1 Sports Bar and Tasty Bakery are adjacent businesses with adjoining parking lots. Sports Bar offers Tasty 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 10-1. 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 Tasty uses it.
D) under no circumstances.

Question 22

Allen promises to pay Barb, his niece, $5,000 if she obtains her degree at City University, where she is in her third year. Barb graduates. Allen is

A) not required to pay because Barb was already at City.
B) not required to pay because obtaining a degree benefits Barb.
C) required to pay because a job can be hard to find after college.
D) required to pay because Barb obtained a degree at City.

Question 23

A release enables recovery beyond that specified in its terms.

Question 24

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

Question 25

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

Question 26

Fact Pattern 10-1 Sports Bar and Tasty Bakery are adjacent businesses with adjoining parking lots. Sports Bar offers Tasty 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 10-1. Tasty'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 Tasty's lot.
C) only if Tasty's customers cannot park in its lot because it is full.
D) under no circumstances.

Question 27

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

Question 28

For the doctrine of promissory estoppel to be applied, there must be no clear or definite promise.

Question 29

A promise is illusory when the contract terms express such uncertainty that the promisor has not definitely promised to do anything.

Question 30

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

Question 31

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 32

An illusory promise is a promise that is enforceable without consideration.

Question 33

Two parties can mutually agree to rescind a contract at least to the extent it is executory.

Question 34

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

Question 35

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

Question 36

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

Question 37

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

Question 38

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 39

Exceptions to the preexisting duty rule include unforeseen difficulties.

Question 40

For an accord and satisfaction to occur, the amount of a debt must be in dispute.

Question 41

Fact Pattern 10-4  Rex contracts with Spicy Pizza to deliver its products. Later, both parties inform each other that they would like to cancel the contract.
Refer to Fact Pattern 10-4. Rex and Spicy

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 42

Under a contract with Red Wines, Sancho begins grading a terraced hillside for the planting of grapes. Halfway through the project, Sancho asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." Red agrees but later refuses to pay. Red's agreement to pay more is

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

Question 43

Fact Pattern 10-2 Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan-was unfair because the consideration for the contract was inadequate.
Refer to Fact Pattern 10-2. With respect to Brad's defense, the court will most likely

A) promise to do something that it has no prior legal duty to do.
B) perform an action that it is not otherwise legally obligated to undertake.
C) refrain from allowing the contract to be enforced.
D) permit the contract to be enforced.

Question 44

EcoEnergy LLC files a suit against Fiber Optics Inc., claiming that the consideration for their contract is inadequate. 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 45

Fact Pattern 10 - 3 Best Restoration, Inc., begins renovating houses for City Edge Property Company under a contract for a stated amount per house. After six months, Best demands an extra $20,000 per house. City Edge agrees to pay.
Refer to Fact Pattern 10 - 3. Suppose Best offers no reason for the extra $20,000, but asserts 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 46

Fact Pattern 10-4  Rex contracts with Spicy Pizza to deliver its products. Later, both parties inform each other that they would like to cancel the contract.
Refer to Fact Pattern 10-4. The contract between Rex and Spicy is completely rescinded. Later, Rex offers to make a new deal to deliver Spicy's products. Spicy is willing to deal, but for a new price. Rex and Spicy

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 47

Fact Pattern 10-2 Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan-was unfair because the consideration for the contract was inadequate.
Refer to Fact Pattern 10-2. "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 48

Sam offers Tiffany $10,000 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 49

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

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

A fire threatens to engulf a commercial building in Metro City. The building's owner promises a cash reward to the Metro Fire Department to extinguish the fire. 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 51

Cindy, a real estate agent, sells her friend Doug's house without charging a commission. Weeks later 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 52

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 53

Frank offers to buy a guitar owned by Holly for twice what she paid for it. She accepts and hands the guitar to Frank. Holly'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 54

Jen promises to pay Kay $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 Kyle more.
D) not enforceable because Kay has not given consideration in return.

Question 55

Business Center Inc. and Catering 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 56

Fact Pattern 10 - 3 Best Restoration, Inc., begins renovating houses for City Edge Property Company under a contract for a stated amount per house. After six months, Best demands an extra $20,000 per house. City Edge agrees to pay.
Refer to Fact Pattern 10 - 3. Suppose Best asks for the extra $20,000 because ordinary business expenses have increased. 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

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 58

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 59

Fact Pattern 10 - 3 Best Restoration, Inc., begins renovating houses for City Edge Property Company under a contract for a stated amount per house. After six months, Best demands an extra $20,000 per house. City Edge agrees to pay.
Refer to Fact Pattern 10 - 3. Suppose Best asks for the extra $20,000 because of extraordinary difficulties that were totally unforeseen at the time the contract was formed. 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 60

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 61

Fact Pattern 10-5 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 10-5. 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 62

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 63

Ethan is indebted to Finance Credit Corporation for $100,000. Ethan 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 64

Greta files a suit against Home Repair Corporation under the doctrine of promissory estoppel. Greta must show that

A) she justifiably refused to fulfill a promise to Home Repair.
B) she justifiably relied on Home Repair's promise.
C) Home Repair justifiably refused to fulfill a promise to Greta.
D) Home Repair justifiably relied on Greta's promise.

Question 65

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 66

Fact Pattern 10-5 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 10-5. The agreement between Brick and Carmen is

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

Question 67

Dale's Uncle Ed tells Dale, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." Ed's promise is

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

Question 68

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 69

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.

Question 70

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 eleven months. 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 71

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 72

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.