Question 1

Joel contracts to hire Huong for one year to tend the orchids in his commercial greenhouse but reserves the right to cancel the employment on one month's notice at any time after Huong begins work.This promise is

Accepted Answer

The answer of Joel contracts to hire Huong for one...

Question 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

Accepted Answer

A court is most likely to evaluate the adequacy of consideration when there is a gross disparity in the value of the consideration exchanged. In this case, Brad is claiming that the consideration for the contract was inadequate, which suggests that there may have been a gross disparity in the value of the consideration exchanged. Therefore, the court would likely evaluate the adequacy of consideration in this situation.

Question 3

Suki works for Renaldo.At the end of her first year,Renaldo promises to pay her a bonus for her "four quarters of success." Renaldo's promise is

Accepted Answer

The answer of Suki works for Renaldo.At the end of...

Question 4

Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay.
-Refer to Fact Pattern 11-3.If CCC offers,as a reason for the extra $100,000,that extraordinary unforeseen difficulties will add considerable cost to the project,the agreement is

Accepted Answer

The agreement is enforceable because unforeseen difficulties can justify a modification to the contract if they are extraordinary and not anticipated at the time the contract was made.

Question 5

Numeric Methods Corporation promises to give stock options to Orin,a project schedule manager,for projects that have already been completed ahead of schedule.This promise is

Accepted Answer

The promise is unenforceable because it is based on past consideration, which is not valid consideration for a new contract. Consideration must be something of value exchanged between the parties at the time of the agreement, not something that has already been completed.

Question 6

Sonic Board Corporation files a suit against Custom Fabricators Company,claiming that the consideration for their contract is inadequate.The court will most likely not examine the adequacy of the consideration if

Accepted Answer

The court will not examine the adequacy of consideration as long as something of value passed between the parties. This is known as the sufficiency of consideration, which is a minimal level of value that must be present in the consideration exchanged for a contract to be enforceable. The other choices are not relevant to whether the court will examine the adequacy of consideration.

Question 7

Nationwide Business Company and One-State Sales,Inc.,agree to simultaneously rescind their contract and enter into a new agreement under which their duties are the same.Nationwide later sues One-State to enforce the new agreement.The court

Accepted Answer

When parties rescind a contract and enter into a new agreement with the same duties, a court may either apply the preexisting rule or allow the rescission. The court may take into consideration the circumstances surrounding the rescission and new agreement before making a decision.

Question 8

General Credit Corporation promises to pay its chief finance officer Hughie and other employees a year-end bonus "if it seems like a good idea at that time." This is

Accepted Answer

This is an illusory contract because the promise to pay the bonus is conditional and vague, making it not a definite promise. It is not a true obligation and lacks consideration, making it unenforceable.

Question 9

Sal contracts with Tasty Pizza Company to deliver its frozen pizza and pasta products to U-Chuse Market and other grocery stores. Both parties change their minds, however, and inform each other that they would like to cancel the contract.
-Refer to Fact Pattern 11-4.The next day,Sal changes her mind again and once more offers to deliver Tasty's products.Tasty is willing to deal,but for a new price.Sal and Tasty

Accepted Answer

Since both parties agreed to cancel the original contract, they are free to negotiate and enter into a new contract with a new price. As long as both parties agree to the new terms, the new contract will be binding.

Question 10

Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay.
-Refer to Fact Pattern 11-3.If CCC offers no reason for the extra $100,000,but says only that it will otherwise stop construction,the agreement is

Accepted Answer

This scenario falls under the preexisting duty rule, which means that CCC was already contractually obligated to complete the construction of the restaurant for the agreed-upon price. Asking for an additional $100,000 without providing any reason or justification is not valid consideration for a new contract, and Diners Restaurants, Inc. would not be legally obligated to pay the extra amount.

Question 11

Sal contracts with Tasty Pizza Company to deliver its frozen pizza and pasta products to U-Chuse Market and other grocery stores. Both parties change their minds, however, and inform each other that they would like to cancel the contract.
-Refer to Fact Pattern 11-4.Sal and Tasty

Accepted Answer

Since both parties have expressed a desire to cancel the contract, they may rescind the contract to the extent that it is executory, meaning they are not required to perform any future obligations under the contract. However, if any obligations have already been performed, those cannot be rescinded.

Question 12

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

Accepted Answer

Adequacy of consideration refers to "how much" consideration is given, meaning the fairness or equivalence of the value exchanged in a contract.

Question 13

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

Accepted Answer

Inadequate consideration can indicate a lack of a bargained-for exchange or mutual assent, meaning that both parties did not agree to the terms of the contract in a fair and balanced manner. This could potentially undermine the validity of the contract.

Question 14

Leif offers Miley $1,000 for her three-year-old laptop computer.Miley accepts.If a dispute arises,a court would likely

Accepted Answer

In this scenario, there is a valid offer and acceptance between Leif and Miley. The court is unlikely to question the adequacy of consideration as it is not their role to evaluate the fairness of the deal. As long as the terms are clear and agreed upon by both parties, the court would likely uphold the contract as valid. Therefore, the best choice is option B - not question the adequacy of the consideration.

Question 15

Jean promises to pay Khalil $500 because "he does not have as much money as other people." Jean's promise is

Accepted Answer

Jean's promise is not enforceable because Khalil has not given any consideration in return. For a contract to be enforceable, there must be an exchange of something of value between the parties involved. In this case, Jean is simply giving money to Khalil out of generosity, without receiving anything in return. Therefore, this promise does not form a contract.

Question 16

Superior-Plus Properties,Inc.,and Topps Construction Company sign a contract that specifies the amounts to be paid for a building project at various stages and on its completion.Additional compensation may be justified by

Accepted Answer

The contract specifies the amounts to be paid for the building project at various stages and on its completion. Therefore, any changes in the market price of materials during the contract should have been taken into account when the initial contract was signed. Business obstacles that arise after the time of the contract can be considered as part of the risks and uncertainties that come with any project, and should not automatically lead to additional compensation. However, if there are extraordinary difficulties that were unforeseen at the time of the contract, such as unforeseen geological conditions, then additional compensation may be justified.

Question 17

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

Accepted Answer

Consideration is legally sufficient if it has some value in the eyes of the law, regardless of its subjective value to the parties involved. It does not have to be objectively worthy or grossly adequate, but it must be legally valid, such as a promise to do something, a promise to refrain from doing something, or an exchange of goods or services. Therefore, option C is the correct choice as it accurately describes the legal requirement for consideration.

Question 18

Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay.
-Refer to Fact Pattern 11-3.If CCC offers,as a reason for the extra $100,000,that ordinary business expenses have increased,the agreement is

Accepted Answer

This is an example of the preexisting duty rule, which states that a promise to do something that one is already obligated to do under law or contract is not consideration. CCC was already contractually obligated to complete the construction for the agreed-upon price, so their demand for an extra $100,000 is not enforceable.

Question 19

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

Accepted Answer

Agro's request for additional payment is considered a preexisting duty, as it was already their duty to complete the project for the agreed-upon price. Bucolic's agreement to pay the additional amount is not legally binding as it was not a new consideration, but rather a modification of an already existing duty. Therefore, the agreement is unenforceable.

Question 20

Baked Stuff Company agrees to supply Comida Café with all the corn chips that it requires for a year.A sudden blight caused by an organism hitherto unknown in the United States results in a shortage of corn,and the price rises sharply.Baked Stuff asks Comida to pay a higher price for the chips.This request is

Accepted Answer

The request is valid due to the unforeseen difficulty of the sudden price increase caused by a blight, which is an unexpected event that can justify a modification of the contract terms.

Quiz 11: Consideration