Deck 10: Consideration

Question 1

Performance that creates a legally binding contract may consist of the destruction of a legal relationship.

Answer 1

True

Question 2

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

Answer 2

False

Question 3

A preexisting duty may arise from a previous contract.

Answer 3

True

Question 4

In contract law,"consideration" refers to the courtesy that one party shows another in negotiating a deal.

Question 5

In general,courts consider the fairness of a contract when deciding if the contract is binding.

Question 6

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

Question 7

Consideration is the value given in return for a promise.

Question 8

It is illegal for two parties to mutually agree to rescind a valid contract.

Question 9

Past consideration can be legally sufficient consideration.

Question 10

To be legally sufficient,consideration must include something of economic value.

Question 11

Consideration is always money.

Question 12

A bargained-for exchange is one of the elements of consideration.

Question 13

Inadequate consideration always indicates undue influence.

Question 14

Adequacy of consideration refers to how much consideration is given.

Question 15

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

Question 16

Parties are NOT free to bargain as they wish.

Question 17

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

Question 18

There are exceptions to the preexisting duty rule.

Question 19

If a promise is made,it will be enforced.

Question 20

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

Question 21

Henry promises not to open his restaurant before 10:00 A.M.if Suzy,who owns a bakery next door to him,promises to close her bakery by 4:00 P.M.Henry's consideration is

A)the destruction of a legal relationship.
B)the creation of a legal relationship.
C)a forbearance.
D)an exchange of money.

Question 22

A promise by an employer to give every employee a 10 percent raise at the end of the year if "management thinks it is warranted" is an example of an illusory promise.

Question 23

Sandra promises to pay Jay $50 per month if he will let her park her car in his parking space at work.Sandra's consideration is

A)the destruction of a legal relationship.
B)the creation of a legal relationship.
C)a forbearance.
D)an exchange of money.

Question 24

A covenant not to sue is against public policy.

Question 25

Kingston promises to pay Melina $500 to install a sump pump in his warehouse.Melina com?pletes 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 26

In most states,a release requires a signed writing.

Question 27

A release does not require consideration to be legally binding.

Question 28

A promise to pay for an act that has already occurred is enforceable because the event is certain.

Question 29

Unforeseen difficulties that justify a demand for additional compensa?tion in?clude risks not ordinarily assumed in business.

Question 30

Rescission is the substitution of one party to a contract for a third party,who agrees to assume the contractual duties.

Question 31

An illusory promise is unenforceable.

Question 32

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

Question 33

Fact Pattern 10-1 (Questions 4-5 apply)
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 10-1.Dave's discount is legally sufficient consid?eration

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 34

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

Question 35

The doctrine of promissory estoppel does not apply if there exists a clear and definite promise.

Question 36

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

Question 37

An accord and satisfaction is a common means of settling a claim.

Question 38

Fact Pattern 10-1 (Questions 4-5 apply)
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 10-1.Estelle's forbearance from towing is legally sufficient consid?eration

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 39

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

Question 40

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

Question 41

Fact Pattern 10-2 (Questions 10-12 apply)
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 10-2.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 42

Easton promises to pay Sara $500 in exchange for Sara's $5,000 car.Under the doctrine of freedom of contract,Easton's consideration is

A)unfair.
B)inadequate.
C)illegal.
D)legally sufficient.

Question 43

Strong Steel Corporation files a suit against Tuff Tool Company,claiming that the consideration for their contract is inadequate.The court will most likely not examine the adequacy of the considera?tion if

A)it is obvious that the consideration is adequate.
B)Tuff Tool asserts that there is adequate consideration.
C)something of value passed between the parties.
D)the consideration is worth more than $100.

Question 44

Fact Pattern 10-3 (Questions 18-19 apply)
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 10-3.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 45

Todos Ltd.agrees to supply Petro Refining,Inc.,with oil from Venezuela.When the gov?ern?ment unexpectedly nationalizes the oil industry,Todos can obtain the resource only at a much higher price.Petro agrees to pay but later files a suit to recover the difference.The court will most likely rule that

A)a change in government is a risk ordinarily assumed in business.
B)an unforeseen difficulty supported the contract modification.
C)Todos engaged in extortion or the so-called holdup game.
D)Todos had a preexisting duty to supply the goods at the initial price.

Question 46

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)unconscionable.
C)legally sufficient.
D)illusory.

Question 47

Fact Pattern 10-3 (Questions 18-19 apply)
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 10-3.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 48

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 49

Rollo promises to perform,for a price,shoe repair services in affiliation with Togs 'n Things,a clothing store.To support a contract,the consid?eration ex?changed by the parties must be

A)adequately considerate.
B)equally valuable.
C)legally sufficient.
D)wisely priced.

Question 50

Genovese Contracting,Inc.,agrees to build a warehouse for Hawthorne Distributors.Genovese runs into the types of difficulties that contrac?tors ordinarily confront,and Hawthorne agrees to pay extra compensation to over?come them. Regarding the agreement to pay more,a court would likely

A)enforce it.
B)rescind it.
C)order the parties to renegotiate it.
D)not enforce it.

Question 51

Mariah promises to pay her assistant Nadine $10,000 in consideration of the ser?vices she provided over the years.Mariah never pays Nadine.Mariah is

A)liable for payment of the $10,000.
B)liable only if Nadine still works for Mariah.
C)not liable,because the consideration is in the past.
D)not liable,because the consideration was unintentional.

Question 52

Jack buys Jill's house for $1.00.If the contract is later disputed in court,the court is likely to declare Jack's consideration

A)unconscionable.
B)legally sufficient.
C)adequate.
D)a forbearance.

Question 53

Sparky offers Teodora $1,000 for her collection of rare coins.She ac?cepts.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

Margaret mows the lawn for her parents.After she has finished mowing the lawn,Margaret's father tells her he will pay her $50.This contract is

A)unenforceable because Margaret has already mowed the law and past consideration is no consideration.
B)enforceable because Margaret's father has a moral obligation to keep his promise to her.
C)unenforceable because minors may not enter into contracts.
D)unenforceable due to the preexisting duty rule.

Question 55

Baked Goods Company agrees to supply Comida Café with all the corn chips that it re?quires for a year.A sudden demand for ethanol results in a shortage of corn,and the price rises sharply.Baked Goods asks Comida to pay a higher price for the chips.This request is

A)invalid as an attempt at extortion or the so-called holdup game.
B)invalid under the preexisting duty rule.
C)valid as a risk ordinarily assumed in business.
D)valid due to the unforeseen difficulty of the sudden price increase.

Question 56

Fact Pattern 10-2 (Questions 10-12 apply)
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 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 57

Fact Pattern 10-2 (Questions 10-12 apply)
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 10-2.A court is most likely to evaluate the adequacy of consid?era?tion 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 58

Jake meets Bill in the parking lot outside of a bar.He grabs Bill roughly by the shoulder and demands that Bill sell Jake Bill's custom milled skis.Jake says,"You wouldn't want to get roughed up,would you?" Bill agrees to sell the skis to Jake.The contract is

A)unenforceable because Bill agreed to it under duress.
B)unenforceable because Jake's consideration is inadequate.
C)enforceable because Jake's consideration is legally sufficient.
D)enforceable because Jake's consideration is adequate.

Question 59

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 60

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 61

Chris promises Dina $40,000 if she graduates from Eagle College.Dina enrolls in Eagle,attends full-time for four years,and graduates.When Dina asks Chris for $40,000,Chris says,"I don't re?member promising you $40,000.But if there was a promise,it's not en?forceable,because we didn't bargain for it.And even if there was a prom?ise that would other?wise be enforceable,I revoke it now." Can Dina en?force Chris's "prom?ise"? Why or why not?

Question 62

Webline Retail Sales,Inc.,promises its salaried employees a bonus at the end of the year if management thinks it is warranted.This promise is

A)enforce?able.
B)unenforce?able because it is not supported by consideration.
C)unenforce?able because the dollar amount is missing.
D)unenforce?able because the employees are paid salaries.

Question 63

Franzea is injured in an accident caused by Gentry.Gentry agrees to pay Franzea $2,500 if she agrees to release him from further liability.She agrees.If Franzea's damages ultimately exceed $2,500,she can collect

A)the balance from Gentry in a breach-of-contract suit.
B)the balance from Gentry in a tort suit.
C)the balance from Gentry on the ground of unforeseen difficulties.
D)nothing more from Gentry.

Question 64

Fact Pattern 10-4 (Questions 29-30 apply)
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 10-4.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.

Question 65

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)unenforce?able.

Question 66

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 67

In May,Alex agrees to work for Beta Sales Company at $800 per week for a year beginning June 1.The following January,Competitive Merchandising,Inc.,offers Alex the same work at $900 per week.Alex tells Beta about the offer.Beta offers to enter into a new contract with Alex at $875 per week.If Alex agrees,is the new Beta contract enforce?able? Why or why not?

Question 68

Carl pledges $1,000 to the Disaster Relief Organization (DRO).On the ba?sis of the pledge,DRO orders additional rescue equipment.Carl fails to pay.In DRO's suit,a court may enforce the pledge

A)according to the preexisting duty rule.
B)as an illusory promise supported by past consideration.
C)on a theory of accord and satisfaction.
D)under the doctrine of promissory estoppel.

Question 69

Windshield Repair Shop (WRS) promises to pay Vincent $1,000 a week to work for WRS.Vincent accepts and quits his job with Ultra Glass.WRS fails to provide a job for Vincent.Vincent has a cause of action based on

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

Question 70

After an accident with a driver for Onyx Security Company,Paul signs a covenant not to sue Onyx for damages in a tort action if it pays for the damage to his car. This covenant

A)bars recovery only if Onyx pays.
B)is an illusory contract.
C)is barred by the preexisting duty rule.
D)is unconscionable.

Question 71

Milo files a suit against Nisa Corporation under the doctrine of prom?issory estoppel.Milo must show that

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

Question 72

Fact Pattern 10-4 (Questions 29-30 apply)
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 10-4.The agreement between Dex and Carmen is

A)a covenant not to sue.
B)an accord and satisfaction.
C)a release.
D)promissory estoppel.