Deck 11: Consideration

Question 1

In contract law,"consideration" refers to the time that a party takes to evaluate a deal. 

Answer 1

False

Question 2

Forbearance is the act of refraining from doing something that one has a legal right to do. 

Answer 2

True

Question 3

Legal sufficiency of consideration is the same as adequacy of consideration.

Answer 3

False

Question 4

If a promise is made,it will be enforced. 

Question 5

For consideration to have "legally sufficient value," it must consist of goods or money. 

Question 6

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

Question 7

In general,a court will question the adequacy of consideration based solely on the comparative value of the things exchanged. 

Question 8

The element of bargained-for exchange distinguishes contracts from gifts. 

Question 9

Parties are usually free to bargain as they wish. 

Question 10

In contract law,the term consideration refers to the serious thought that underlies a party's intent to enter into a contract. 

Question 11

Legally sufficient consideration is something of value in the eyes of the law. 

Question 12

A promise by one party to pay another for refraining from an action that one has a legal right to undertake is enforceable. 

Question 13

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

Question 14

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

Question 15

Rescission is the remaking of a contract so as to enrich one party at the expense of the other. 

Question 16

A transaction that lacks a bargained-for exchange lacks an element of consideration. 

Question 17

To be legally sufficient,consideration must be evidenced by something tangible. 

Question 18

Performance that creates a legally binding contract may consist of an act. 

Question 19

The fact that the word consideration is used in an agreement means,by itself,that consideration has been given. 

Question 20

A promise made in return for an act or event that has not yet taken place is unenforceable. 

Question 21

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

Question 22

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

Question 23

A release does not require consideration to be legally binding. 

Question 24

In a covenant not to sue,the parties substitute a contractual obligation for some other type of action. 

Question 25

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

Question 26

Uri promises to pay Tami,his niece,$5,000 if she obtains her degree at State Institute of Technology,where she is in her third year.Tami graduates.Uri is​ 

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

Question 27

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

Question 28

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

Question 29

Even if the terms of a contract express such certainty of performance that the promisor has not definitely promised to do anything,the promise binds the promisor. 

Question 30

Two parties can mutually agree to rescind a contract unless it is executory. 

Question 31

Kingston promises to pay Melina $500 to install a sump pump in his warehouse.Melina completes the installation.The act of installing the pump​ 

A) ​imposes a moral obligation on Kingston to pay Melina. 
B) ​imposes no obligation on Kingston unless he is satisfied with the job. 
C) ​is not sufficient consideration because it is not goods or money. 
D) ​is the consideration that creates Kingston's obligation to pay Melina.

Question 32

If,during the performance of a contract,extraordinary difficulties arise that were totally unforeseen at the time the contract was formed,a court may allow an exception to the preexisting duty rule. 

Question 33

A release is an agreement in which one party gives up the right to pursue a legal claim against another party. 

Question 34

Refer to Fact Pattern 11-1.Estelle's forbearance from towing is legally sufficient consideration​ 

A) ​because it is a promise of something of value. 
B) ​only if Dave's customers park in Estelle's lot. 
C) ​only if Estelle's customers cannot park in her lot because it is full. 
D) ​under no circumstances.

Question 35

Under the doctrine of promissory estoppel,a promise will not be enforced unless it is supported by consideration. 

Question 36

A release bars any further recovery beyond the terms stated in the release. 

Question 37

Fact Pattern 11-1  Dave's Hobby Town and Estelle's Yarn Shoppe are adjacent stores with adjoining parking lots. Dave offers Estelle a discount on purchases from Dave's store if Estelle will not tow the cars of Dave's customers who park in Estelle's lot.
Refer to Fact Pattern 11-1.Dave's discount is legally sufficient consideration​ 

A) ​because it is a promise of something of value. 
B) ​only if Dave adds a cash rebate. 
C) ​only if Estelle uses it. 
D) ​under no circumstances.

Question 38

A covenant not to sue is against public policy.

Question 39

A covenant not to sue does not always bar further recovery. 

Question 40

Quentin questions whether there is consideration for his contract with Rainey to exchange his performance with the Saxophone Symphony for her payment of a certain amount.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 41

Fact Pattern 11-4 Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay.
Refer to Fact Pattern 11-4.If Teatro says it is asking for the extra $250,000 because ordinary business expenses have increased,the agreement is​ 

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

Question 42

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

Question 43

Aaron questions whether there is consideration for his contract with Banquet Hall to exchange his musical performance of country tunes at select social events for Banquet'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 44

Fact Pattern 11-3 Sally contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract.
Refer to Fact Pattern 11-3.Sally and Tasty​ 

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 45

William buys Liz's house for $100,000,which is the fair market value of the house.If the contract is later disputed in court,the court is likely to declare William's consideration​ 

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

Question 46

Fact Pattern 11-2 Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 11-2.A court is most likely to evaluate the adequacy of consideration if​ 

A) ​a thing exchanged has no intangible value to one of the parties. 
B) ​something exchanged is not of direct economic or financial value. 
C) ​the items exchanged were of unequal value. 
D) ​there is a gross disparity in the value of the consideration exchanged.

Question 47

Martha is the sheriff of Junction,Texas.Alex robs a gas station on the edge of town and then evades capture.A $500 reward is offered for his capture.The following week,Martha captures Alex.Martha​ 

A) ​can collect the $500 reward. 
B) ​cannot collect the $500 reward because she had a preexisting duty to catch Alex. 
C) ​cannot collect the $500 reward because it is not legally sufficient consideration. 
D) ​cannot collect the $500 reward because it would be unconscionable.

Question 48

Julia and Mary have a contract that is still executory.They mutually agree to rescind their contract and at the same time make a new contract.If the new contract is contested in court and the court finds that there was a preexisting duty under the original contract,then the new contract​ 

A) ​will not be enforceable. 
B) ​will still be enforceable. 
C) ​will not require consideration from either side. 
D) ​will be legally sufficient.

Question 49

Applied Methods Corporation promises to give stock options to Belden,a production designer,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 50

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

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

Valley Paragliders Association files a suit against Wing Designers,Inc.,claiming that the consideration for their contract is inadequate.The court will most likely not examine the adequacy of the consideration if​ 

A) ​there is a large disparity in the amount of consideration exchanged. 
B) ​the consideration involves the performance of services. 
C) ​something of value passed between the parties. 
D) ​the consideration is worth less than $100.

Question 52

Frisco offers to buy a Gibson guitar owned by Hayden for twice what Hayden paid for it.She accepts and hands the guitar to Frisco.Her delivery of the guitar is​ 

A) ​not consideration because her voluntary consent may be lacking. 
B) ​not consideration because the exchange is not a bargain. 
C) ​consideration. 
D) ​not consideration because the value is not legally sufficient.

Question 53

Sparky offers Teodora $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 54

Fact Pattern 11-4 Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay.
Refer to Fact Pattern 11-4.If Teatro says it is asking for the extra $250,000 because it has encountered extraordinary unforeseen difficulties that will add considerable cost to the project,the agreement is​ 

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

Question 55

Fact Pattern 11-4 Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay.
Refer to Fact Pattern 11-4.If Teatro offers no reason for the extra $250,000,but says only that it will stop work if it is not paid,the agreement is​ 

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

Question 56

Fact Pattern 11-2 Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 11-2.If,as Brad claims,the consideration in this problem is inadequate,it may indicate a lack of​ 

A) ​accord in Brad's satisfaction with the value of the deal. 
B) ​voluntary consent. 
C) ​flexibility on the part of College Credit to accommodate Brad's needs. 
D) ​"heft," "substance," or "weight" in the terms of the contract.

Question 57

Digital Enterprise,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) ​an option-to-cancel clause. 
D) ​an output contract.

Question 58

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

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

Question 59

Fact Pattern 11-2 Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 11-2."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 60

Fact Pattern 11-3 Sally contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract.
Refer to Fact Pattern 11-3.The next day,Sally changes her mind and again offers to deliver Tasty's products.Tasty is willing to deal,but for a new price.Sally and Tasty​ 

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 61

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 62

Claudia pledges to donate $10,000 to Disaster Relief & Recovery Inc.(DR&R).On the basis of the pledge,DR&R orders additional supplies.If Claudia does not fulfill the pledge,a court may enforce it​ 

A) ​under the preexisting duty rule. 
B) ​on the basis of unforeseen difficulties. 
C) ​as an illusory promise. 
D) ​under the doctrine of promissory estoppel.

Question 63

While sailboarding,Jolene is injured when Kilroy carelessly crosses her path.Kilroy's insurance company offers Jolene $50,000 to release Kilroy 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 Jolene's injuries are unforeseeably difficult. 
C) ​unenforceable because Kilroy has a preexisting duty to pay. 
D) ​unenforceable because the release is an illusory promise.

Question 64

Milo files a suit against Nisa Corporation under the doctrine of promissory estoppel.Milo must show that​ 

A) ​Milo justifiably refused to ful fill a promise to Nisa. 
B) ​Milo justifiably relied on Nisa's promise to his detriment. 
C) ​Nisa justifiably refused to ful  fill a promise to Milo. 
D) ​Nisa justifiably relied on Milo's promise to its detriment.

Question 65

After an accident with a vehicle licensed to Guardian Security Company,Heidi signs a covenant not to sue Guardian Security for damages in a tort action if it pays for the damage to her car.This covenant is​ 

A) ​a bar to recovery if Guardian Security pays. 
B) ​an illusory contract. 
C) ​barred by the preexisting duty rule. 
D) ​barred by the doctrine of promissory estoppel.

Question 66

Twyla's dock is damaged in an accident caused by Ulric's negligence.Twyla agrees not to sue him if he will pay for the damage.If Ulric fails to pay,Twyla can bring an action for breach of contract.This is​ 

A) ​a covenant not to sue. 
B) ​an illusory promise. 
C) ​an unforeseen difficulty. 
D) ​a release.

Question 67

Fact Pattern 11-5 Dex and Carmen are in an auto accident. Dex offers Carmen $2,000 if she promises not to pursue her potential legal claim against Dex. 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 11-5.The agreement between Dex and Carmen is​ 

A) ​a covenant not to sue. 
B) ​an illusory promise. 
C) ​a release. 
D) ​promissory estoppel.

Question 68

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 69

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

A) ​liable to Niki under the concept of rescission and new contract. 
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

Maya's motorcycle is damaged in an accident caused by Luc's negligence.Luc agrees to pay Maya $25,000 if she agrees to release him from further liability.Maya agrees.If her 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 71

Dave's uncle tells Dave that if "he feels that Dave deserves it," he will give Dave $1,000 when Dave graduates from college.Dave's uncle's promise is​ 

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

Question 72

Fact Pattern 11-5 Dex and Carmen are in an auto accident. Dex offers Carmen $2,000 if she promises not to pursue her potential legal claim against Dex. 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 11-5.In Carmen's suit against Dex to recover her repair and medical expenses,Carmen will most likely recover​ 

A) ​half the amount to pay the costs over what Dex 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.