Deck 12: Consideration

Question 1

A promise to pay a debt for which a statute of limitations bars recovery is an enforceable promise.

Answer 1

True

Question 2

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

Answer 2

True

Question 3

Use of the word consideration in an agreement means that consideration has been given.

Answer 3

False

Question 4

Rescission is the dissolution of a contract that returns the parties to the positions they held before the contract.

Question 5

A release does not require consideration to be legally binding.

Question 6

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

Question 7

Risks ordinarily assumed in business do not constitute consideration for the modification of a contract.

Question 8

Inadequate consideration may indicate undue influence.

Question 9

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

Question 10

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

Question 11

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

Question 12

A promise to do what one already has a legal duty to do is legally suf?ficient consideration.

Question 13

If a debt is liquidated, an accord and satisfaction cannot take place.

Question 14

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

Question 15

Courts typically consider the adequacy of consideration.

Question 16

A covenant not to sue is against public policy.

Question 17

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

Question 18

A promise to pay for an act that has yet to occur is unenforceable.

Question 19

Parties are not generally free to bargain as they wish.

Question 20

A promise by one party to pay another for refraining from an act is enforceable.

Question 21

Refer to Fact Pattern 12-A1. If, as Jesse claims, the consideration in this problem is inadequate, it may indicate a lack of

A) accord in Jesse's satisfaction with the value of the deal.
B) bargained-for exchange or mutual assent.
C) flexibility on the part of College Credit to accommodate Jesse's needs.
D) "heft," "substance," or "weight" in the terms of the contract.

Question 22

Refer to Fact Pattern 12-A2. If CCC offers, as a reason for the extra $100,000, that extraordinary unforeseen difficulties will add consid?erable cost to the project, the agreement is

A) enforceable as an accord and satisfaction.
B) enforceable because of unforeseen difficulties.
C) unenforceable as an illusory promise.
D) unenforceable due to the preexisting duty rule.

Question 23

Betty pledges to donate $1,000 to the Children's Hospital. On the basis of the pledge, the hospital orders additional equipment. Betty reneges on the pledge. The hospital sues Betty. If the court enforces the pledge, it will be

A) because Betty's performance is uncertain.
B) because of the unforeseen difficulties.
C) because the pledge is a gift.
D) under the doctrine of promissory estoppel.

Question 24

Mary promises to pay her assistant Ned $10,000 in consideration of the ser?vices he provided over the years. Mary never pays Ned. Mary is

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

Question 25

Refer to Fact Pattern 12-A2. If CCC offers, as a reason for the extra $100,000, that ordinary business expenses have increased, the agree?ment is

A) enforceable as an accord and satisfaction.
B) enforceable because of unforeseen difficulties.
C) unenforceable as an illusory promise.
D) unenforceable due to the preexisting duty rule.

Question 26

Domestic Auto 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 27

Kelsey promises to pay Jon, her son, $15,000 if he obtains his degree at Ivy University, where he is currently in his second year. Jon graduates. Kelsey is

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

Question 28

Herm promises to pay Nixie to work as an assistant buyer for his Organic Foods stores. Nixie agrees and quits her job with Pic-U Grocery, but Herm does not hire her. Herm is most likely liable to Nixie under

A) the concept of accord and satisfaction.
B) the doctrine of promissory estoppel.
C) the preexisting duty rule.
D) no circumstances.

Question 29

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

A) collect the balance from Bronco in a breach-of-contract suit.
B) collect the balance from Bronco in a tort suit.
C) collect the balance from Bronco on the ground of unforeseen events.
D) not collect the balance from Bronco.

Question 30

Auto Body Repair Shop (ABRS) promises to pay Ben $1,000 a week to work for ABRS. Ben accepts and quits his job with Car Care Service. ABRS fails to provide a job for Ben. Ben has a cause of action based on

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

Question 31

Panini Vittles, Inc., contracts with Qino to deliver its sandwiches. Later, the parties decide to cancel their contract. They can

A) rescind their entire contract.
B) rescind their contract to the extent that it is executory.
C) rescind their contract if they make a new contract at the same time.
D) not rescind their contract.

Question 32

Refer to Fact Pattern 12-A1. "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 33

Venture Capital Corporation loans Wally $15,000 to start a new business. Wally does not pay, but Venture fails to sue within the time prescribed by the applicable statute of limitations. Wally's promise to pay the debt even though recovery is barred

A) needs new consideration.
B) needs no consideration.
C) is unenforceable regardless of any consideration.
D) needs legally sufficient and adequate consideration.

Question 34

Refer to Fact Pattern 12-A2. If CCC offers no reason for the extra $100,000, but says only that it will otherwise stop construction, the agreement is

A) enforceable as an accord and satisfaction.
B) enforceable because of unforeseen difficulties.
C) unenforceable as an illusory promise.
D) unenforceable due to the preexisting duty rule.

Question 35

Under a contract with Bucolic Farms, Agro Excavation, Inc., begins digging an agricultural pond. In mid-project, Agro asks for $15,000 over the contract price, claiming an increase in the "cost of doing business." Bucolic agrees but later refuses to pay. Their agreement is

A) unenforceable because Agro's performance was a preexisting duty.
B) unenforceable because Bucolic's promise was illusory.
C) enforceable.
D) unenforceable because its performance is unforeseeably difficult.

Question 36

Jen questions whether there is consideration for her contract with Isaac to exchange her catering services for his payment of a certain amount. To constitute consideration, the value of whatever is exchanged must be

A) objectively worthy.
B) grossly inadequate.
C) legally sufficient.
D) practically sound.

Question 37

Vince offers to buy a book owned by Sun-Hi for twice what Sun-Hi paid for it. She accepts and hands the book to Vince. Sun-Hi's delivery of the book is

A) not consideration because its transfer is a preexisting duty.
B) not consideration because its exchange is not a bargain.
C) consideration.
D) not consideration because its value is legally insufficient.

Question 38

Refer to Fact Pattern 12-A1. 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 39

Homebuyers Mortgage Corporation's promise to pay its employees a year-end bonus "if it seems like a good idea at the time" is

A) an enforceable contract.
B) an illusory promise.
C) an unconscionable proviso.
D) a unilateral pact.

Question 40

Berkie's bicycle is damaged in an accident caused by Imogene. Berkie agrees not to sue Imogene if she will pay for the damage. If she fails to pay, Berkie can bring an action for breach of contract. This is

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

Question 41

Flossy promises to pay her cousin Garth, who is dangerously obese, $10,000 if Garth loses 100 pounds within the next two years. Garth agrees, per?forms his part of the bar?gain, and asks for the money. Flossy refuses to pay, say?ing that she forgot about the deal, but that even if she did make such a pledge, there was no valid consideration for it. Garth files a suit against Flossy. In whose favor is the court likely to rule, and why?

Question 42

Real Estate Investments, Inc., owns and manages an office building. Secure Insurance Company agrees to lease the building for five years. Un?der the lease, Secure is obligated to pay all of the utility costs. Two years into the term, Secure asks Real Estate to modify the lease to provide that the utility costs be split equally between them. Real Estate agrees, but later decides it does not want to share the costs and refuses to pay. Is the landlord bound to its agreement to share the utility costs? Why or why not?