Question 1

When a contract is authenticated by the affixing of a seal,the contract will be enforceable even when it lacks
A)a promissory basis.
B)an acceptance.
C)consideration.
D)contractual intention.
E)an offer.

Accepted Answer

Historically, a seal on a document signified a formal commitment, making the contract enforceable even without consideration, which is usually a requirement for contract validity.

Question 2

A gratuitous promise differs from a contract in that
A)a gratuitous promise cannot lapse.
B)it does not require the payment of money to the offeror by the offeree.
C)consideration flows only in one direction.
D)a gratuitous promise cannot be revoked.
E)the terms of a gratuitous promise are not precise enough to be binding.

Accepted Answer

A gratuitous promise is a promise made without receiving anything in return. While a contract requires consideration (something of value exchanged by both parties), a gratuitous promise involves consideration flowing in only one direction, from the promisor to the promisee. However, a gratuitous promise may still be legally binding if certain conditions are met, such as if the promise is made under seal or if it is foreseeable that the promisee will rely on the promise to their detriment.

Question 3

The principle of injurious reliance is
A)the loss or harm that is suffered by a promisee who,to his or her detriment,relies on a gratuitous promise.
B)the contractual relationship that arises between an injured party and the person or persons on whom this injured party relies.
C)the injury that a person in a contractual relationship suffers when there is a breach of contract.
D)the amount of compensation that is awarded to a party where there is a breach of contract.
E)the personal injury that is suffered by persons who are involved in contractual situations.

Accepted Answer

The principle of injurious reliance refers to the loss or harm that is suffered by a promisee who, to his or her detriment, relies on a gratuitous promise. This means that the promisee suffers a negative consequence as a result of relying on the promise made to them.

Question 4

When Sav was a teenager,he was involved in a boating accident.After seeing the accident,Philip approached in a second vessel and saved Sav's life.Some years later Sav promised to reward Philip for his life-saving actions.He specifically promised to turn over a valuable coin set that he had acquired over the years.On the day he was to deliver the coin set Sav changed his mind and said that although he was grateful,he was not going to part with the coin set.Philip's court action to enforce the promise will
A)succeed because the promise is binding.
B)fail because the promise is gratuitous and not binding.
C)succeed because the previous benefit constitutes consideration.
D)succeed because consideration will be implied at law.
E)fail because a deposit is required when dealing with past consideration.

Accepted Answer

The promise made by Sav to Philip is considered gratuitous because it was made after Philip had already performed the act of saving Sav's life. In contract law, for a promise to be enforceable, there must be consideration, which is something of value exchanged between the parties. Since Philip's act occurred in the past and was not made in exchange for Sav's promise at the time of the act, it does not constitute valid consideration for Sav's later promise. Therefore, the promise is not binding, and Philip's court action to enforce the promise will fail.

Question 5

The contractual requirement of consideration provides that
A)the contract must be given careful consideration before it is entered into.
B)the offeror must pay cash for the offeree's promise to perform an act.
C)an offeree must pay cash for the offeror's promise to perform an act.
D)each party must give something of value in exchange.
E)what is exchanged by the parties must be of equal value.

Accepted Answer

Consideration requires each party to give something of value in exchange for the promise made by the other party. This can be in the form of money, goods, services, or a promise to perform an action. However, it does not require that the value of what is exchanged by the parties be equal, only that there is some exchange of value. Choice A and B are not relevant to the contractual requirement of consideration, and choice C is incorrect as it is the offeror who makes the offer, not the offeree.

Question 6

A,at the request of B,enters into a contract to buy a horse from B for a certain price.Just after entering into the contract,B tells A that the horse is sound and healthy.Later A discovers that,in fact,the horse is in ill health.In this situation,B's statement to A that the horse was sound and healthy
A)is partly fresh and past consideration so as to not make B's promise binding.
B)is partly fresh and partly past consideration so as to make B's promise binding.
C)is past consideration so as to not make B's promise binding.
D)is fresh consideration so as to make B's promise binding.
E)all of the above

Accepted Answer

B's statement to A about the horse's health was made after the contract was already formed, so it cannot be considered fresh consideration. Additionally, there was no additional benefit given by A to B in exchange for the statement, so it cannot be considered partly fresh and partly past consideration. Therefore, the statement is only based on past consideration (i.e. the original agreement to sell the horse), which is not enough to make it binding.

Question 7

Jack walks into a bar.He is a little tipsy.The waitress pours him a pint of beer and he pays with all the money he has on him.He makes this statement to the waitress: "Sorry I can't tip you today,but you know what,I have this lottery ticket,and if I win,I'll split it with you." The waitress says,"No problem,Jack." Jack later makes a copy of the ticket for the waitress.The next day Jack receives a call from Stephanie,the waitress,who tells him that she checked the numbers and that he has won $1 million.Stephanie asks,"Our deal is on right?" Jack says,"What deal?" She says,"You promised to split the winning ticket with me." He says,"Really?" Which of the following is TRUE?
A)Jack will have to split the proceeds with Stephanie on a quantum meruit basis.
B)Stephanie can sue Jack for breach of contract if she does not get her share of the ticket.
C)Jack promised to split the winning ticket with Stephanie and she accepted,so a valid contract was created.
D)No contract arose because there was no intention on the part of Jack to enter into legal relations with Stephanie.
E)A contract did not arise because Jack's statement was not an offer.

Accepted Answer

A contract requires an intention to create legal relations. Jack's statement was likely made in a casual, non-serious context, indicating no intention to form a legally binding agreement.

Question 8

James does some work for Jim.Jim refuses to pay on the grounds that not all the work was done.James takes Jim to court and the judge says James is entitled to a quantum meruit.This means that
A)the parties will agree on the appropriate price.
B)a dispute regarding the price should be resolved by arbitration.
C)Jim must pay a reasonable amount for the services rendered.
D)a price will be fixed for the work done.
E)James is entitled to his expenses.

Accepted Answer

Quantum meruit means "as much as he deserves" in Latin. In legal terms, it refers to a payment made for services rendered when there is no contract or when the contract is found to be void. In this case, since Jim refuses to pay on the grounds of incomplete work, the judge orders payment based on quantum meruit, meaning a reasonable amount for the services rendered. Option A is incorrect since there is no agreement between the parties. Option B is incorrect since arbitration is a dispute resolution process and not related to payment in this case. Option D is incorrect since the judge did not fix a price for the work done. Option E is also incorrect since James may or may not be entitled to his expenses depending on the specific circumstances of the case.

Question 9

The reasonable bystander test is
A)a test that employs witnesses to make candid observations about contract cases.
B)the test that is used by the courts to determine whether parties intended to enter into legal relations with each other.
C)the test that employs non-specialists as members of a jury in contract cases.
D)the test that the parties can use to determine who is in breach of contract.
E)the test that the parties can use to determine compensation in contract cases.

Accepted Answer

The reasonable bystander test is used by the courts to determine whether parties intended to enter into legal relations with each other. It involves asking whether an objective bystander, looking at the parties' conduct and circumstances, would believe that they intended to enter into a legally binding agreement.

Question 10

A promise by a creditor to accept less than full payment from a debtor is
A)unenforceable because the creditor did not provide consideration.
B)enforceable because the promisee accepts the offer.
C)a bilateral contract.
D)unenforceable because it is a gratuitous promise.
E)enforceable because it gives rise to a contract.

Accepted Answer

A gratuitous promise is not enforceable because it lacks consideration.

Question 11

Jack and Jill are friends.Jack agrees to mow Jill's lawn and Jill agrees to pay Jack $50.00.Jill wants the lawn mowed by April 1.Jill returns on April 3 and finds that the lawn has not been mowed.Jill,who is entertaining the next day,goes to Jack and promises that if he mows the lawn that day,she will give him an additional $20.00.Jack mows the lawn but Jill refuses to pay him the additional $20.00.Which of the following is TRUE?
A)Jack can sue Jill for breach of contract.
B)Jill has no obligation to pay because the promise to pay the additional $20.00 was not supported by fresh consideration.Jack had a pre-existing legal duty to mow the lawn.
C)There was no offer and acceptance.
D)Jill has an obligation to pay the additional $20.00 because a legally enforceable promise to pay was made.
E)Jill made an offer and Jack accepted it,so a contract was created.

Accepted Answer

Jack had a pre-existing legal duty to mow the lawn as per the original agreement for $50. Adding an additional amount of $20 for the same task did not provide any fresh consideration, and therefore, Jill is not obligated to pay the additional amount. This principle is known as the pre-existing duty rule, and it prevents parties from making unilateral modifications to an existing contract.

Question 12

The concept of estoppel is where
A)the court stops a party from performing a contract.
B)the terms of the contract require that one of the parties be stopped from performing a particular act.
C)the promisee is stopped from denying the truth of a fact or statement.
D)the court suspends the operation of the contract.
E)the maker of a statement or promise is prevented by the courts from either denying the truth of the statement or going back on a promise.

Accepted Answer

Estoppel is a legal principle that prevents someone from denying or contradicting their own previous statement or act in a legal proceeding. This means that the maker of a statement or promise is prevented by the courts from either denying the truth of the statement or going back on a promise. Therefore, the best choice is E - the maker of a statement or promise is prevented by the courts from either denying the truth of the statement or going back on a promise.

Question 13

When one person requests the services of another,and the other performs those services,the law
A)requires that the plaintiff prove there was a promise to pay.
B)treats the services as being provided gratuitously.
C)implies a promise to pay.
D)recognizes no implied promise to pay.
E)requires that the service provider pay a specific amount.

Accepted Answer

The law implies a promise to pay when one person requests and another performs services, unless there is evidence to the contrary. This is known as an implied contract. Therefore, the answer is C, that the law implies a promise to pay.

Question 14

Which of the following would a court NOT regard as consideration on the part of a party to a contract?
A)a promise to pay for what the other party has already done
B)giving up what the party honestly believes is a right to sue
C)a promise to pay money to the other party in the future
D)a promise to pay money to a third party who is not a party to the contract
E)money paid to the other party

Accepted Answer

Consideration must be something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances. A promise to pay for what the other party has already done is not considered valid consideration because it does not involve a new or additional benefit or detriment to either party; it is essentially a promise to pay for a past action, which does not meet the requirement for consideration in forming a contract.

Question 15

Shahid orders a pizza by telephone and says he will pay on delivery.Which of the following would constitute consideration received by Shahid?
A)placing the call
B)promising to pay for the pizza
C)handing over the money
D)accepting delivery of the pizza
E)none of the above

Accepted Answer

Accepting delivery of the pizza would constitute consideration received by Shahid. This is because he is receiving the pizza in exchange for his promise to pay for it on delivery.

Question 16

Which of the following is NOT true about consideration?
A)Consideration must be of some value in the eyes of the law.
B)A gratuitous promise is not supported by consideration.
C)Consideration has to be adequate.
D)Consideration must be sufficient.
E)Consideration can be in the form of a detriment to a party.

Accepted Answer

Consideration does not need to be adequate, meaning the law does not require the value of the consideration to be fair or equal to the value of the promise or goods/services received in return. The key requirement is that consideration must be legally sufficient (having some value in the eyes of the law) and not necessarily equal in value to what is received in return.

Question 17

Even when offer and acceptance and consideration are present,there may be no enforceable contract if
A)the subject of the contract is too trivial.
B)there were no witnesses present at the signing of the contract.
C)the contract is not in writing.
D)there is no intent to create legal relations.
E)the consideration is not adequate.

Accepted Answer

In order for a contract to be enforceable, the parties must have intended to create legal obligations. If there is no intent to create legal relations, then there is no valid contract. This is the case even if offer, acceptance, and consideration are present.

Question 18

An intention to create legal relations exists if
A)the promisor and the promisee have identified all the consideration involved in the contract.
B)there is an offer,acceptance,and consideration.
C)a reasonable person would believe that the parties intended to be bound by the contract.
D)the court examines the facts and determines that the parties intended to enter into legal relations.
E)the parties have capacity to enter into a contract.

Accepted Answer

An intention to create legal relations refers to the intention of the parties to be bound by the contract. This can be inferred by examining the circumstances of the agreement and whether a reasonable person would believe that the parties intended to be legally bound. Therefore, choice C is the best answer. The other options may be important for forming a valid contract, but they do not specifically address the intention to create legal relations.

Question 19

On March 1,Al agrees to sell Barb his house for $250 000.Barb pays a deposit of $15 000,and they agree that title will transfer and the price will be paid on April 30.The agreement is signed by both parties under seal.What is the consideration on Barb's part?
A)the deposit of $15 000
B)there is no consideration
C)quantum meruit
D)the seal
E)the promise to pay the $250 000

Accepted Answer

The consideration on Barb's part is her promise to pay the full purchase price of $250,000, which is the agreed-upon exchange for the house.

Question 20

Consideration is
A)the price that is paid for the promise of another.
B)a special kind of gratuitous promise.
C)the acceptance of an offer.
D)the offer that is made to another.
E)a special kind of acceptance.

Accepted Answer

Consideration refers to the price that is paid for the promise of another. It is an essential element for a contract to be valid. It can be money, property, services, or anything else of value that is bargained for and exchanged between the parties. Therefore, option A is the correct choice.

Quiz 7: Formation of a Contract: Consideration and Intention

When a contract is authenticated by the affixing of a seal,the contract will be enforceable even when it lacks

A gratuitous promise differs from a contract in that

The principle of injurious reliance is

The contractual requirement of consideration provides that

James does some work for Jim.Jim refuses to pay on the grounds that not all the work was done.James takes Jim to court and the judge says James is entitled to a quantum meruit.This means that

The reasonable bystander test is

A promise by a creditor to accept less than full payment from a debtor is

The concept of estoppel is where

When one person requests the services of another,and the other performs those services,the law

Which of the following would a court NOT regard as consideration on the part of a party to a contract?

Shahid orders a pizza by telephone and says he will pay on delivery.Which of the following would constitute consideration received by Shahid?

Which of the following is NOT true about consideration?

Even when offer and acceptance and consideration are present,there may be no enforceable contract if

An intention to create legal relations exists if

On March 1,Al agrees to sell Barb his house for $250 000.Barb pays a deposit of $15 000,and they agree that title will transfer and the price will be paid on April 30.The agreement is signed by both parties under seal.What is the consideration on Barb's part?

Consideration is