Deck 12: Consideration

Question 1

If Kate promises a stereo system to Uli,which of the following holds true with regard to the idea of consideration?

A) Uli will not be able to enforce Kate's promise if he has not done anything in return.
B) Uli has to perform an act in return for Kate's promise.
C) Kate's promise should not be supported by consideration.
D) Uli's consideration should be an act and not a promise.

Answer 1

A
Explanation: Courts generally do not enforce a promise against the person who made it (the promisor) unless the person the promise was made to (the promisee) has given up something in exchange for the promise. In effect, the requirement of consideration requires a promise to pay the "price" the promisor asked for in order to gain the right to enforce the promisor's promise. In the given scenario, Uli will not be able to enforce Kate's promise if he has not done anything in return.

Question 2

If Khalid agrees to sell his house to Lalita for $300,000,a property which is actually worth $310,000,_____.

A) Lalita can recover damages for breach of contract if Khalid refuses to perform
B) Lalita will be able to get a court order for the specific performance of Khalid's promise
C) Khalid is not entitled to equitable remedies
D) Lalita cannot recover damages for breach of contract

Answer 2

A
Explanation: Courts may refuse to grant equitable remedies to those who seek to enforce grossly inadequate bargains on the grounds that such persons are not entitled to the special treatment equity affords. In the given scenario, Lalita can recover damages for breach of contract if Khalid refuses to perform.

Question 3

When a promisee agrees not to do something he or she has a legal right to do in exchange for the promisor's promise,it constitutes legal value.

Answer 3

True

Question 4

The promise not to file suit is not valid consideration because the promisor has given up a legal right,the right to sue.

Question 5

A liquidated debt is one that is due and certain,which means that there is no dispute about the existence or the amount of the debt.

Question 6

A promise supported by past consideration is always enforceable.

Question 7

A promisee's consideration must be another promise and cannot be in the form of an act.

Question 8

Which of the following statements is true of consideration?

A) Consideration always has a monetary value regardless of a legal value.
B) A promisee can be enforced by the courts to keep his or her promise.
C) Consideration enforces gratuitous promises.
D) A promisee's consideration may be an act or a promise.

Question 9

Legal value depends on the adequacy of consideration.

Question 10

As a general rule,performing a preexisting duty is not consideration.

Question 11

Generally,a bilateral contract that lacks mutuality is unenforceable due to lack of consideration.

Question 12

As a general rule,a promise to discharge a liquidated debt for part payment of the debt at or after its due date is unenforceable due to lack of consideration.

Question 13

Courts grant equitable remedies to those who seek to enforce grossly inadequate bargains on the grounds that such persons are entitled to the special treatment equity affords.

Question 14

Once a binding accord and satisfaction has been entered into,parties give up their right to have a court decide their liability.

Question 15

Consideration can have legal value if the promisee:

A) does not involve in an act in the case of unilateral contracts.
B) does something he or she had no prior legal duty to do in exchange for the promisor's promise.
C) agrees to do something he or she has a legal right to do in exchange for the promisor's promise.
D) does not give up something in exchange for the promise made by the promisor.

Question 16

Freedom of contract includes the freedom to make bad bargains.

Question 17

Under the Uniform Commercial Code,a modification of an existing contract for the sale of goods requires new consideration.

Question 18

All courts hold that cashing a "payment in full" check discharges the obligation of debt under the Uniform Commercial Code.

Question 19

Legal value that is bargained for and given in exchange for an act or promise is called _____.

A) compensation
B) obligation
C) consideration
D) forbearance

Question 20

In determining whether a party has given consideration,courts look at whether the promises exchanged were of equal value.

Question 21

If the amount of a debt is "due and certain," _____.

A) a promise to pay less than the amount lacks consideration
B) the debt is considered to be an unliquidated one
C) there is a dispute about the existence of the debt
D) there is a dispute about the amount of the debt

Question 22

Rudo asked Harun to detail his brand-new sports car by painting flames on the side of the vehicle.After the parties signed a contract and after Harun had already started to paint,Rudo decided that he also wanted Harun to install a new stereo system in the car at the same cost and modified the contract likewise.Harun sued Rudo for modifying the existing contract without any prior intimation,but he lost the lawsuit because:

A) Rudo's act was unenforceable for lack of consideration.
B) Rudo's promise was enforceable.
C) the old contract automatically got cancelled with the addition of a new condition.
D) Harun's act was not a preexisting duty and hence of no legal value.

Question 23

An unliquidated debt can be best described as one that:

A) has not been paid in full.
B) involves an honest dispute about the existence or amount of the debt.
C) is unenforceable due to lack of consideration.
D) is due and certain with no dispute about the existence or the amount of the debt.

Question 24

According to the rule of _____,if a promisee's performance was rendered before the promisor's promise was made,then it can never serve as consideration,even though it may meet the "legal value" part of the test.

A) past consideration
B) preexisting duty
C) forbearance
D) promissory estoppel

Question 25

On October 29,1989,Alex agrees to paint Georgia's house during the Thanksgiving week for $4,000 in exchange for Georgia's promise to pay him $4,000 in cash immediately upon completion of the work.Which of the following statements is true of this case?

A) Georgia could hire another painter on October 31 without legal liability to Alex because until he has painted the house, he has not given any consideration for Georgia's promise to hire him.
B) Alex could back out of the deal on October 31 without legal liability to Georgia because she has not given any consideration for Alex's promise to do the work until she pays him.
C) Both parties are bound on October 29 because each has given consideration for the other's promise.
D) Alex could back out of the deal on October 29 without legal liability if he could prove that $4,000 was inadequate consideration to paint Georgia's house.

Question 26

Under section 2-209 of the Uniform Commercial Code,agreements to modify existing contracts for the sale of goods:

A) need new consideration to be binding.
B) need no new consideration to be binding.
C) require parties to formally terminate their original agreement and start over.
D) need new consideration to be binding and require parties to formally terminate their original agreement.

Question 27

Jin moves into a neighborhood in Philadelphia and opens a repair shop.He is harassed by the local gang leader who wants to extort money from him.He promises to pay Sheng,a police officer whose patrol includes Jin's store,$50 a week to "keep an eye on the store" while walking his patrol.Which of the following statements is true of this situation?

A) Jin's promise is enforceable.
B) The cop can sue Jin for not keeping his promise of paying $50 per week.
C) Sheng's promises toward Jin are not consideration.
D) Jin is the promisee and Sheng is the promisor.

Question 28

If a professor charges extra fees to take a regularly scheduled class,it would not be taken as a consideration because such an act:

A) is prohibited by promissory estoppels.
B) would violate the preexisting duty rule.
C) is new consideration that is provided to support a modification.
D) is a tort.

Question 29

Which of the following statements is true about the modification of an existing contract under the Uniform Commercial Code?

A) Agreements to modify contracts for the sale of goods need consideration to be binding.
B) If the price of the goods in a modified agreement is $500 or more, the modification is enforceable.
C) There is no duty to agree to a modification.
D) There is no legal prohibition against agreements that result from coercion.

Question 30

Which of the following statements is true about unliquidated debts?

A) As the amount is due and certain, a promise to pay less lacks consideration.
B) All courts allow collection of the remainder if checks marked "payment in full" are cashed without reservation.
C) As the amount is genuinely in dispute, an agreement resulting in accord and satisfaction is enforceable.
D) Composition agreements are an exception to unliquidated debts and can be enforced without additional consideration.

Question 31

_____ is the legal term for settling a disputed claim.

A) Accord and satisfaction
B) Forbearance
C) Composition agreement
D) Promissory estoppel

Question 32

Lou enters into an agreement with LaFancy Inc.,an event management company,to coordinate her wedding in June for the sum of $10,000.In March,Lou calls LaFancy to tell the company the deal is off,because she thinks she can do a better job herself.LaFancy sues Lou,and Lou argues lack of consideration as a defense.Which of the following statements holds true of this scenario?

A) LaFancy has given consideration.
B) LaFancy had a legal duty to plan Lou's wedding even before the agreement was signed.
C) Lou can enforce LaFancy's promise to her.
D) Lou was the only promisor in this contract.

Question 33

When a contracting party runs into unforeseeable difficulties that make his or her performance impossible,courts will:

A) not enforce a modification that is not supported by new consideration.
B) prosecute the contracting party on criminal charges.
C) enforce a modification in the interest of fairness.
D) will make the contracting party pay up in full.

Question 34

Identify the correct statement regarding consideration.

A) A promise by public officials to perform their official duties is always a consideration.
B) A promisor's promise not to commit a crime or a tort can never be consideration.
C) As a general rule, performing or agreeing to perform a preexisting duty is consideration.
D) When new consideration is provided to support a modification, it is unenforceable.

Question 35

Polly promises to pay city council member Smith $500 to show up for the weekly city council meetings.Polly's promise is:

A) supported by consideration.
B) wholly enforceable.
C) not supported by consideration.
D) supported by conditional consideration.

Question 36

According to the Uniform Commercial Code,if the original agreement requires any modification to be in writing,an oral modification:

A) is unenforceable.
B) is enforceable.
C) can be enforced if the value of the goods exceeds $500.
D) can create legal value.

Question 37

If a promisor already had a duty to do what he has done or promised to do,the promisor has _____.

A) made new consideration to support a modification and it is unenforceable
B) not given legal value
C) agreed to do something he had no right to do
D) made a promise which is consideration

Question 38

Composition agreements are:

A) made in a way that allows the promisor to decide whether or not to perform the promise.
B) agreements between a debtor and two or more creditors who agree to accept a stated percentage of their liquidated claims against the debtor at or after the due date.
C) agreements entered into when someone promises not to file a legal suit in exchange for a promise to pay a certain sum of money or some other consideration.
D) generally treated as non-binding on the parties to the agreement because of the fact that doing so appears to be contrary to the general rule on liquidated debts.

Question 39

Stintson Corp.had agreed to create employee identity cards for McLaughlin Inc.for $60,000.Some of the cards delivered by Stintson Corp.had damages made during the lamination process.McLaughlin Inc.promised Stintson Corp.an additional $20,000 to replace the damaged identity cards,and Stintson Corp.did so.Then McLaughlin Inc.refused to pay Stintson Corp.more than $60,000 for the work.Which of the following statements is true of this situation?

A) Stintson Corp. is not entitled to any more than $60,000 for its work.
B) McLaughlin Inc. owes Stintson Corp. the additional $20,000.
C) Stintson Corp. would still be entitled only to $60,000 because such an act is new consideration that was provided to support the modification.
D) Stintson Corp. is entitled to the additional $20,000 as legal value has nothing to do with adequacy of consideration.

Question 40

On January 1,2006,Bev owed City Bank $5,000 on her car loan.The loan was due in May 2006.On January 1,2006,Bev sent the bank a check for $4,800 marked "In full payment for any and all claims City Bank has against me." City Bank cashes the check.Under these circumstances,_____.

A) City Bank can sue Bev for $200
B) City Bank has not promised to accept the payment as "payment in full"
C) Bev can avoid paying the $200
D) Bev has not given consideration

Question 41

Explain the difference between a liquidated and an unliquidated debt.

Question 42

Jake had grown tired of working on the family farm and was considering moving away.However,his parents told him,"If you'll stay and help us,we'll leave you the farm when we die." As a result,Jake decided to stay on the farm and worked there for the next twenty years.However,when his parents finally died,Jake learned that they had left the farm to his brother,Nathan.Jake filed suit against his parents' estate to enforce their promise of leaving him the farm.Which of the following would be true of this scenario?

A) Nathan and the parents' estate should be allowed to defeat Jake's claim to the farm by arguing that the parents' promise was enforceable because Jake gave consideration for the promise.
B) The work that Jake did on the farm before his parents made their promise is sufficient consideration to make their promise enforceable.
C) Jake's parents' promise is not enforceable because it was illusory.
D) Jake's parents' promise would be enforceable under the doctrine of promissory estoppel.

Question 43

Explain forbearance to sue in relation to consideration.

Question 44

Forbearance occurs when:

A) a debtor and two or more creditors agree to accept a stated percentage of their liquidated claims against the debtor.
B) someone promises not to file a legal suit in exchange for a promise to pay a certain sum of money or some other consideration.
C) promises are worded in a way that allows the promisor to decide whether or not to perform the promise.
D) there is no dispute about the existence or the amount of the debt.

Question 45

Which of the following is true of additional exceptions to the requirement of consideration?

A) Once a bankrupt debtor is granted a discharge, creditors have a legal right to collect the discharged debts.
B) According to the Uniform Commercial Code, an offer by a merchant in a signed writing to keep an offer open is good only when it has additional consideration.
C) Charitable subscriptions are unenforceable unless and until the institution to which the promise was made incurs obligations by relying on the promise.
D) A creditor who fails to file suit to collect a debt within the time limit set by the appropriate statute of limitations has the right to collect it.

Question 46

Vladimir Constructions contracted to build the Petersons a house for $50,000.When Vladimir began digging the foundation,it hit bedrock,which was highly unusual in that area.Vladimir told the Petersons that it required an extra $5,000 to build the house.The Petersons agreed,but when the house was done,refused to pay Vladimir any more than the original contract price.What can be the outcome if Vladimir sues the Petersons for the extra $5,000 and why?

Question 47

Past consideration is sometimes accepted for _____.

A) official duties
B) legal obligations
C) moral obligations
D) charitable donations

Question 48

Explain with an example how promissory estoppel affects consideration.

Question 49

Explain an illusory promise and provide an example.

Question 50

_____ are worded in a way that allows the promisor to decide whether or not to perform the promise.

A) Novations
B) Compositor promises
C) Illusory promises
D) Modifications