Question 1

Consideration can be:

Accepted Answer

Consideration in contract law must be something of value exchanged between the parties at the time of the contract (present) or promised to be exchanged in the future. Past consideration, something given or promised before the contract, is not valid.

Question 2

In which of the following contracts is consideration not required?

Accepted Answer

A deed is a type of contract where consideration is not required.

Question 3

Which of the following statements is not correct?

Accepted Answer

A

Question 4

The rule in Foakes v Beer states that:

Accepted Answer

The rule in Foakes v Beer establishes that part payment of a debt does not discharge the entire debt unless there is fresh consideration or the creditor agrees to accept it as full satisfaction.

Question 5

The legal effect of promissory estoppel is:

Accepted Answer

Promissory estoppel allows a promise to be legally enforceable even if consideration was not given, as long as the promisee relied on the promise to their detriment. It prevents a person who has made a promise from going back on their word when the promisee has reasonably relied on that promise.

Question 6

You signed a one- year contract to work on a special accounting team for a major retailer.Most of the team are young and inexperienced.Three months after the contract began your team leader resigned.The retailer was worried that you and your colleagues would become lazy and inefficient while a new leader was being found.It offered each of you a bonus payment of $50 per week to be punctual and hard working until the new leader started work.You all agreed.It took one month to find a new leader.The retailer is refusing to pay you the promised $200.Under common law,what legal rights,if any,do you have?

Accepted Answer

Under common law, you are not entitled to the bonus because you did not provide any additional consideration beyond what you were already contractually obligated to do.

Question 7

Which of the following statements is/are accurate in relation to promissory estoppel (PE)?

Accepted Answer

Statement A and B are both accurate. Statement C is not entirely accurate as PE is typically used as a 'sword' by the plaintiff to assert a claim rather than a 'shield' to defend against a legal action.

Question 8

Manuela's grandfather promised to loan her $3000 to help her to finish year 12.She promised to repay him six months after she commenced paid work.Although Manuella has been working for two years she has never attempted to repay her grandfather.If he sues Manuela,which statement indicates the most likely legal result? Ignore the issue of legal intention.

Accepted Answer

The answer of Manuela's grandfather promised to loan her $3000...

Question 9

Part payment of a debt may provide sufficient consideration under certain circumstances.Which of the following will not provide sufficient consideration?

Accepted Answer

Under common law, part payment of a debt on the due date does not constitute sufficient consideration for the creditor's promise to forgive the remainder of the debt, as the debtor is not providing anything beyond what they are already legally obligated to do. However, if the payment is made under different conditions (such as earlier, by a third party, at a different location, in a different currency, or accompanied by a promise to refrain from legal action), it may be considered sufficient consideration due to the variation from the original terms of the debt.

Question 10

The case of Roscorla v Thomas involved the sale of a horse and a promise about its qualities.The case is a precedent for the rule that:

Accepted Answer

Roscorla v Thomas established the principle of past consideration not being good consideration, which means that a promise made in return for an act that has already been performed cannot be enforced as a contract because the consideration has already been given.

Question 11

Bill sold a lawnmower to Brodie for $350.About one minute after Brodie had paid the purchase price he asked Bill - 'Does it have any safety problems?'.'No,mate.It's totally safe,' promised Bill.When Brodie tried to use the lawnmower,a blade came loose and badly cut his leg.If Bill had known there was defect with the blade,which of the following statements summarises Brodie's contractual rights under common law?

Accepted Answer

The answer of Bill sold a lawnmower to Brodie for...

Question 12

Executory consideration is also known as:

Accepted Answer

Executory consideration refers to a promise to give something at a future point in time in exchange for something else. It is considered future consideration and is distinguished from past consideration, which is something given in the past without a current exchange of value, and present consideration, which is something given immediately in exchange for something else.

Question 13

Which of the following cases supports the common law rule that consideration is not required to have a legally recognised value?

Accepted Answer

In Chappell & Co v Nestle Co Ltd., the court held that consideration must be sufficient but need not be adequate. This case supports the common law rule that consideration does not need to have a legally recognized value, as the wrappers in the case were considered sufficient consideration even though they had no intrinsic value.

Question 14

The doctrine of promissory estoppel (PE)may prevent a party who made a promise as part of an agreement from:

Accepted Answer

The doctrine of promissory estoppel prevents a party from breaking a promise if it was relied upon and resulted in loss. It does not address the provision of consideration, unconscionable conduct, or commencing legal action for an implied promise or part performance.

Question 15

Helen's Burmese cat,Fluffy,became stuck in a tree.Mike,who was passing by,climbed up and rescued Fluffy.Helen thanked him and found out Mike had nowhere to live.She said he could live in one of her units for $25 per week (the rental value was $350 per week)for one year.Mike agreed and even paid her $1.00 in advance. He then jumped for joy and accidentally crushed Fluffy.Helen has refused to go ahead with the rental arrangement.Mike has sued Helen for breach of contract.Under common law,Mike's payment of $1 would probably be classified as consideration that was:

Accepted Answer

Mike's payment of $1 is considered as consideration because it represents a bargain between the parties. The fact that the amount is not adequate does not matter as long as it is sufficient to indicate that both parties intended to be legally bound by the agreement. Therefore, the contract is valid and enforceable.

Question 16

Consideration may be defined as:

Accepted Answer

Consideration is the price that a promisor demands from the promisee in exchange for the promise made. It is the benefit received by one party in return for performing or promising to perform some act or service for the other party. Therefore, option B is the best definition for consideration. Options A, C, and D do not accurately reflect the definition of consideration.

Question 17

Which of the following is not an example of consideration?

Accepted Answer

Consideration involves something of value exchanged between parties in a contract. A gift, such as giving money for a birthday (option A), does not involve an exchange or obligation and thus is not considered consideration.

Question 18

In Waltons v Maher the High Court held that:

Accepted Answer

The High Court in Waltons v Maher established that all three options A, B, and C were viable applications of promissory estoppel in Australian law. Therefore, the correct answer is D, "all of the above."

Question 19

Yesterday you volunteered to spend two hours re- organising the computer files of a student in your class.After you did the job she offered to pay you $50.You accepted.Now,she has refused to pay you.Which of the following statements best describes your legal rights?

Accepted Answer

A contract requires an agreement with consideration before the work is done. Since the promise to pay was made after the work was completed, there is no enforceable contract.

Question 20

A creditor has agreed to accept an offer of a lesser sum as full payment for a debt.This payment will legally discharge the debt if it is made:

Accepted Answer

Accepting a lesser sum before the agreed date the original debt had to be repaid can constitute a valid consideration, thus legally discharging the debt. This is because the early payment can be seen as a benefit to the creditor.

Quiz 11: Consideration