Deck 11: Consideration

Question 1

Which of the following considerations is legally insufficient?

A) Tony bought a book for $100. Ruby offers to buy it for $10.
B) Tony bought a book for $100. He offers to sell it for free if Ruby helps him in shifting to his new house.
C) Tony bought a book for $1,000. Ruby offers to buy it for $2,000 if it does not rain the next day.
D) Tony bought a book for $100. He offers to sell it to Ruby for free if she helps him befriend the new girl in their lane.
E) Tony bought a book for $1,000. He offers to sell it to Ruby for $10 if she quits drinking.

Answer 1

D

Question 2

The receipt by one person of something legal he/she had no pre-existing right to is known as a novation.

Answer 2

False

Question 3

An unforeseen difficulty arising after a contract is made may be resolved by an) _____.

A) composition agreement
B) promissory estoppel with detrimental reliance
C) needs contract
D) accord and satisfaction
E) reservation of rights

Answer 3

D

Question 4

If a promisor gives an illusory promise, he/she gives no consideration and no contract is formed.

Question 5

If a plaintiff files a suit for claim of a contract after seven years, his claim will be dismissed, regardless of its merits.

Question 6

In Gross v. Diehl Specialties Intern., Inc., the court determined that the plaintiff's post-employment benefits should revert to those in his original contract, because of a detriment to him.

Question 7

A legal consideration always has to be certain.

Question 8

A driver offers to clean the bus, if the bus conductor does not smoke until the bus reaches the destination. Since the detriment does not confer a tangible benefit on the promisor, it is not legally sufficient.

Question 9

An unforeseen difficulty arising after a contract is made may be resolved by an accord and satisfaction.

Question 10

Suppose a man offers to pay $100 to his neighbor, if the neighbor promises not to dump his garbage in his backyard. The man has a legal obligation to pay his neighbor.

Question 11

Rony takes his car to a car repair workshop to get it repaired. The cost of the repair has not been discussed beforehand in detail, although the cost in the nearby areas is normally around $1,000. After the repair, Rony and the mechanic agree on a bill of $800. Which of the following statements is correct?

A) A week after the repair, the mechanic sues Rony for a bill of $1,000.
B) After the repair, the mechanic agrees to give a discount of 10 percent. A week later, the mechanic sues Rony for a bill of $280.
C) A week after the repair, Rony sends a check of $100 marked "payment in full," which is encashed by the mechanic. A week later, the mechanic sues Rony for a bill of $700.
D) When Rony reaches home, the car's battery blows up due to an extra fitting made by the mechanic. Rony pays the mechanic just $100.
E) A week after the repair, Rony sends a check of $100 marked "payment in full," which is encashed by the mechanic. A week later, the mechanic sues Rony for a bill of $800.

Question 12

An exclusive dealing agreement is one where a person can pay his creditors on a pro-rata basis.

Question 13

The UCC permits one party to discharge, without consideration, a claim arising out of an alleged breach of contract by the other party.

Question 14

A case of bankruptcy is enforceable without consideration according to common law.

Question 15

In case a party is making a promise to another nation, is can be enforceable without consideration.

Question 16

Identify the legally insufficient consideration.

A) Alex promised to pay Tom for his car in four installments of $1,000 each. He fails to pay these installments. Tom threatens suit, to which Alex promises to pay just $100 in exchange for Tom's promise to release him from the remainder of the amount.
B) Alex promised to pay Tom for his car in four installments of $1,000 each. He fails to pay these installments. Tom threatens to sue him, to which Alex promises to pay an interest of 2 percent whenever he gets his debtors to repay him.
C) Alex promised to pay $1,000 to Tom for his car, due March 1. On March 1, Tom pays only $400 in exchange for Tom's promise to release him from the remainder of the amount.
D) Alex promised to pay $1,000 to Tom for his car, due March 1. On February 27, Tom pays only $400 in exchange for Tom's promise to release him from the remainder of the amount.
E) Alex promised to pay $1,000 to Tom for his car, due March 1. On March 18, Tom pays only $400 and takes Alex to the carnival.

Question 17

A debt can be liquidated by being written down in unambiguous terms.

Question 18

Which of the following is true for a valid consideration?

A) The detriment need not be an actual detriment.
B) A detriment to the promise can only confer a tangible benefit on the promisor.
C) The promisee cannot agree to forego something, without that something being given to the promisor.
D) Legal consideration can be a promise irrespective of events that may never happen.
E) The detriment is never a benefit to the promisee.

Question 19

A promise made which saves the parties from incurring losses is a legal detriment.

Question 20

Because the consideration on option contracts is nominal, its recital in the written instrument is usually a mere formality, and it is frequently paid.

Question 21

A railroad company offers to purchase as much iron as its board of directors might order from an iron producer. After two months, the iron producer sues the railroad saying that they had not purchased any iron thus far from them. The railroad is not legally bound to give compensation to the iron producer. Under which clause can the railroad justify its stand?

A) Illusory promise
B) Preexisting duty
C) Past consideration
D) Section 2-209 of UCC
E) Accord and satisfaction

Question 22

In what cases are promises enforceable without consideration?

Question 23

_____ is an agreement where a defaulter can pay money to all those lenders whom he owes money to on a pro-rata basis.

A) Exclusive dealing agreement
B) Creditors' composition
C) Unliquidated debt
D) Covenant not to sue
E) Firm offer

Question 24

On May 1, 1999; Alex promises to sell his bike to Jerry for $400 on May 20, 1999. On May 10, due to an emergency, Jerry offers to pay $900, if Alex can sell his bike on May 11. Alex sells his bike on May 11, but Jerry refuses to pay $900 in return, to which Alex files suit in the court on May 15, 2005. The court dismisses the case due to which of the following reasons?

A) Running of statute of limitations
B) Voidable duties
C) Promissory estoppels
D) Alleged breach of contract
E) Moral obligation

Question 25

Which of the following promises is enforceable without consideration according to statutory law?

A) Promissory estoppel
B) Revival of promise barred by statute of limitations
C) International contracts
D) Voidable duties
E) Moral obligation

Question 26

In Denney v. Reppert, which of the following led to the final judgment by the court?

A) Illusory promise
B) Out of bailiwick
C) Promissory estoppel
D) Promise revived after statute of limitations has passed
E) Liquidated damage

Question 27

Which of the following promises is enforceable without consideration according to the common law?

A) Alleged breach of contract
B) Bankruptcy
C) International contracts
D) Promissory estoppel
E) Convention on contracts

Question 28

What is consideration? What are the purposes served by consideration? What are the elements of consideration?

Question 29

In which of the following situations is consideration required?

A) An agreement modifies a sales contract.
B) A promise to act a pre-existing duty.
C) The contract does not bind the promisor to give up anything.
D) A person promises a benefit to someone to do something which the promisee is already disallowed from doing.
E) A voidable promise has been renewed by the promise.

Question 30

In Board of Control of Eastern Michigan University v. Burgess, which of the following led to the final judgment by the court?

A) Defendant received no consideration for the purported option.
B) The consideration offered was inadequate.
C) The defendant revoked the offer prior to its acceptance.
D) The purchase price was increased.
E) An enforceable offer was created.

Question 31

In Gross v. Diehl Specialties Intern., Inc., which of the following led to the final judgment made by the court?

A) The owner sold the company to the Diehl enterprises.
B) The company had declined severely in 1983 and 1984.
C) The plaintiff was terminated by the defendant.
D) The 1982 contract was not the operative contract because there existed no consideration for it.
E) The promise to carry out an already existing contractual duty does not constitute consideration.

Question 32

Billy contracts to build Harry a house for $100,000. While laying the foundation, Billy unexpectedly discovers that the area is prone to lightning, to avoid which a lightning rod has to be installed. To ensure that Billy does not delay, Harry agrees to pay $50,000 more than originally agreed. In this unforeseen difficulty arising after the contract is made, in which of the following ways can Billy claim the remaining amount?

A) After the house is constructed, Harry refuses to make the extra payment. The lightning rod costs Billy $100. Harry has no obligation because he only made an illusory promise.
B) After the house is constructed, Harry refuses to make the extra payment. The lightning rod costs Billy $45,000. The problem may be resolved by an accord and satisfaction.
C) After the house is constructed, Harry refuses to make the extra payment. After persistent bargaining, Harry gives a check of $100,100 to Billy, which is encashed by him.
D) After the house is constructed, Harry refuses to make the extra payment. After persistent bargaining, Billy agrees to settle for $90,000 and an old bike from Harry.
E) After the house is constructed, Harry refuses to make the extra payment. After persistent bargaining, Billy agrees to settle for $90,000, if Harry tutored Billy's son.