Deck 14: Consideration

Question 1

Consideration is the bargained-for exchange between the parties to a contract.

Answer 1

True

Question 2

Generally, a promise is legally enforceable even if nothing is given or received for the promise.

Answer 2

False

Question 3

In a benefit-detriment approach, consideration is a benefit received by the promisee.

Answer 3

False

Question 4

The promise of a creditor to refrain from debt collection in exchange for a promise by the debtor to modify the terms of the transaction is legally sufficient consideration.

Question 5

In a contract for the sale of goods, any modification made by the parties to the contract must be supported by consideration to be binding.

Question 6

If a merchant receives and cashes a check for partial payment of a debt and the check bears the notation that the amount is in full payment of a disputed sum, the total debt is released.

Question 7

If one party's promise contains no real obligation, then the promise is merely an illusory promise and the contract will fail for lack of mutuality.

Question 8

A promise to make a gift is enforceable.

Question 9

Charitable pledges or subscriptions are binding on the donor if the donor knew the charity would rely on the pledge.

Question 10

An illusory promise creates a bilateral contract.

Question 11

A promise that in fact does not impose any obligation on the promisor is known as an elusive promise.

Question 12

In the case of unforeseen difficulties, a second promise to pay a contractor a higher amount on the original contract may be enforceable.

Question 13

One promise may serve as consideration for many return promises.

Question 14

A cancellation provision cannot exist in a binding enforceable contract.

Question 15

True consideration occurs only when the value of one promise is equal to the value of the promise given by the other party.

Question 16

Sara Student wished to pay off her $5,000 student loan. If she sends in a check for $3,000 and the creditor cashes the check, the debt will be fully satisfied provided the check is marked "paid in full."

Question 17

Ordinarily doing, or promising to do what one is already under a legal obligation to do, is not legal consideration.

Question 18

Consideration is what a promisor demands and receives as the price for a promise.

Question 19

The fact that the consideration supplied by one party is slight when compared with the burden undertaken by the other party is immaterial.

Question 20

With regard to an unliquidated debt, payment by the debtor of less than the amount claimed by the creditor is consideration for the latter's agreement to release or settle the claim.

Question 21

A(n) _______ is a promise that depends on the occurrence of a specified condition in order for the promise to be binding.

A) cancellation provision.
B) preexisting legal obligation.
C) conditional promise.
D) good-faith adjustment.

Question 22

A landowner's promise to pay a contractor a bonus to complete construction of a building according to the terms of a pre-existing contract between the landowner and the contractor is:

A) binding if the promise is in writing.
B) binding, since the promise is made by a non-merchant.
C) binding, since the promise is made to a merchant.
D) ordinarily not binding on the promisor.

Question 23

Promissory estoppel does NOT require

A) a signed writing explaining the promise.
B) a clear and definite promise
C) that justice be better served by enforcement of a promise
D) that a promisee has justifiably relied on the promise

Question 24

In a composition of creditors, the various creditors of a single debtor mutually agree to accept a fractional part of their claims in full satisfaction of the claims.

Question 25

In most states, promises made to another based on moral obligation lack consideration and are not enforceable.

Question 26

The doctrine of promissory estoppel is also known as the doctrine of beneficial reliance.

Question 27

None of the following can be legal consideration except:

A) Refraining from beating one's spouse.
B) Promising to refrain from beating one's spouse.
C) Refraining from smoking cigarettes.
D) Refraining from using cocaine.

Question 28

Liz agrees to cook 20 dinners for Brian, and in exchange, Brian will repair all of the plumbing in Liz's house. Liz and Brian's 'deal' has:

A) insufficient consideration, because cooking twenty dinners is not worth as much as repairing all of the plumbing in Liz's house.
B) insufficient consideration, because this kind of bargain is against public policy.
C) insufficient consideration, because there is a clear lack of any bargain.
D) sufficient consideration, because Liz has promised something of value.

Question 29

When there is no consideration for a promise, the agreement is:

A) a quasi contract.
B) equitable.
C) not binding.
D) unethical.

Question 30

Courts will consider the adequacy of the consideration when:

A) one party clearly has the better side of the deal.
B) one party has more business experience than the other.
C) one party claims to have been defrauded.
D) one party shows a much lower price nationally-advertised on television.

Question 31

An agreement to pay reasonable additional compensation to a contractor for the performance of a pre-existing contract when the contractor faces extraordinary circumstances caused by unforeseen difficulties is called a:

A) good-faith adjustment.
B) bribe.
C) compensatory allowance.
D) relief payment.

Question 32

A contract in which one party agrees to purchase goods from another contingent upon the purchaser's ability to locate suitable financing is said to:

A) be illegal.
B) result from undue influence.
C) contain a waiver.
D) contain a conditional promise.

Question 33

Past benefits already received by a promisor cannot be consideration for a later promise.

Question 34

Damages recoverable in a case of promissory estoppel are determined by the profits that the promisee expected.

Question 35

Under the doctrine of promissory estoppel, a promisor may be prevented from asserting that his or her promise is unenforceable because the promisee gave no consideration for the promise.

Question 36

From a(n) _______ approach, consideration is defined as a detriment incurred by the promisee.

A) charitable subscription.
B) promissory estoppel.
C) benefit-detriment.
D) bargained-for-exchange.

Question 37

Ordinarily, a promise to perform an existing legal obligation is:

A) not consideration.
B) binding if the promisor promises to perform with extra care.
C) binding if the promisor promises to perform to suit the personal satisfaction of the promisee.
D) binding if the promisee would experience substantial loss due to breach of the promise.

Question 38

Consideration is:

A) the concern shown by the other contracting party.
B) what is demanded by the promisor as the price for the promise.
C) a stated number of dollars.
D) the concern of both contracting parties for the protection of the environment.

Question 39

Examples of illusory promises include:

A) cancellation provisions.
B) apparent promises.
C) conditional obligations.
D) real obligations.

Question 40

Which of the following is not consideration for a present promise?

A) a good faith adjustment
B) compromise and release of claims
C) the promise to pay one's child support obligation, consistent with a pre-existing court order.
D) the performance of a requested act

Question 41

Consideration is not required in:

A) contracts for the sale of goods.
B) employment contracts.
C) agreements to modify employment contracts.
D) agreements to modify contracts for the sale of goods.

Question 42

The effect of the making of a partial payment to satisfy an admitted debt is an example of the rule that:

A) past benefits cannot be consideration for a later promise.
B) a conditional promise may be consideration.
C) doing what one is already under a legal obligation to do is not consideration.
D) consideration must be adequate to be binding.

Question 43

John received a promotion at work and felt new clothes would be necessary in the new position. John went to a local store and charged three ties on his charge account at a cost of $60 each. Bill, a friend of John's, saw a sidewalk vendor selling ties at a cost of three for $10 and bought three at that price. The friends compared purchases that night and found that they had purchased identical ties. John became enraged and said that he would not pay the charge-account bill because the ties were clearly not worth $60 each. Bill indicated that he would testify on John's behalf if litigation ensued. What would be the probable outcome of the lawsuit?

Question 44

Dave Tompkins was up late one night watching a television campaign for a charitable organization. The organization was seeking donations in order to construct a new building that would serve as the organization's headquarters. One of Tomkins' favorite performers appeared to promote the campaign, and this prompted Dave to telephone in a pledge. Tomkins pledged $10,000 to the charity and, feeling good about his action, finally went to sleep. The next morning, Tomkins regretted making the pledge because its enforcement would cause great personal financial hardship. Will the charity be able to legally enforce the pledge Tomkins made? If so, why might the charity choose not to enforce a lawful pledge?

Question 45

Gerwin's daughter Mary was seeking a position as an associate attorney with Baker, Charles & Dixon, a large metropolitan law firm. The firm, after several meetings with Mary over a two-month period, made Mary an offer of employment on January 15. Mary accepted the offer that day and immediately left for Cape Cod to celebrate without telling Gerwin or anyone else about her new job.?On January 17, two days after Mary had accepted the offer, Gerwin sent Baker, Charles & Dixon a letter in which she offered to give Baker all of her legal business (approximately $40,000 per year) if the law firm would hire Mary. The law firm accepted.?After Gerwin learned that Mary already had been hired by Baker, Charles & Dixon, Gerwin refused to transfer her business to the law firm. The law firm has brought suit against Gerwin on the grounds that a valid contract exists between them. How will the case be decided?

Question 46

The rule that doing or promising to do what one is already legally bound to do is not consideration applies to a part payment made in satisfaction of a(n) __________ debt.

A) unliquidated
B) superfluous
C) non-superfluous
D) liquidated

Question 47

Which of the following is not a necessary element of promissory estoppel?

A) The promisor and the promisee must engage in a bargained-for exchange.
B) The promisor must intend or should reasonably expect that the promisee will rely on the promise.
C) The promisee must in fact rely on the promise in some definite and substantial manner.
D) Enforcement of the promise is the only way to avoid injustice.

Question 48

What damages are recoverable in a case of promissory estoppel?

A) profits that the promisor expected
B) profits that the promisee expected
C) an amount necessary to restore the promisee to the position he or she would have been in had the promisee not relied on the promise
D) an amount necessary to restore the promisor to the position he or she would have been in had the promisor not relied on the promise

Question 49

When a debtor tenders a check stating "paid in full" and the creditor cashes the check, the debt:

A) is always discharged.
B) may be discharged if it is a liquidated debt.
C) may be discharged if it is a unliquidated debt.
D) is never discharged.