Question 1

Cindy, a real estate agent, sells her friend Doug's house without charging a commission. In return, Doug promises to give Cindy $1,000. This promise is not an enforceable contract because

Accepted Answer

The promise is not enforceable because the consideration (selling the house) is past. For a contract to be valid, the consideration must be present or future, not something that has already been completed.

Question 2

A fire threatens to engulf a commercial building in Middletown. The building's owner promises a cash reward to the Middletown Fire Department to extinguish the blaze. The firefighters cannot claim the reward because

Accepted Answer

Extinguishing fires is part of the firefighters' preexisting duty as public servants, so a promise of a reward for performing this duty does not constitute a new consideration for a contract.

Question 3

Fritz offers to buy a guitar owned by Holle for twice what she paid for it. She accepts and hands the guitar to Fritz. Holle's delivery of the guitar is

Accepted Answer

Consideration in a contract refers to something of value exchanged between the parties. Holle's delivery of the guitar in exchange for twice its purchase price constitutes consideration because it represents a mutual exchange of value: the guitar for the agreed-upon price. The fairness or adequacy of the consideration is generally not relevant as long as something of value is exchanged.

Question 4

Rory questions whether there is consideration for his contract with Silver Spurs Club to exchange his performance of country music on certain dates for Silver's payment of a certain amount. To constitute consideration, the value of whatever is exchanged must be

Accepted Answer

Consideration in a contract must be legally sufficient, meaning it must have some value in the eyes of the law. This does not require the value to be equal or precisely adequate, just that something of legal value is exchanged.

Question 5

Maria is the sheriff of Narez, Texas. Oscar robs a Narez gas station and a $500 reward is offered for his capture. When, later, Maria finds and arrests him, with respect to the reward, she can

Accepted Answer

Maria cannot collect the reward because, as the sheriff, she already has a preexisting duty to arrest lawbreakers. The offer of a reward does not create a new contract or obligation for her to perform her duties.

Question 6

Under a contract with Soy Farms, Tai begins grading a terraced hillside for planting. Halfway through the project, Tai asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." The farm agrees but later refuses to pay. The agreement to pay more is

Accepted Answer

The agreement to pay more is unenforceable because Tai's performance was a preexisting duty under the original contract. Asking for more money to complete the same work does not constitute a new consideration, making the promise to pay the additional amount unenforceable.

Question 7

EcoEnergy LLC files a suit against Fiber Optics Inc., claiming that the consideration for their contract is inadequate-that the plaintiff will not realize sufficient financial benefit from the deal to make it worthwhile. Most likely, the court will

Accepted Answer

Courts typically do not evaluate the adequacy of consideration as long as something of legal value is exchanged between the parties. The principle is that the parties are free to enter into contracts on their own terms, and it is not the role of the court to assess whether the deal was good or bad for either party.

Question 8

Holes Inc. begins digging a foundation at a construction site for Investment Company under a contract for a certain price. After six months, Holes demands a higher price because of extraordinary difficulties that were totally unforeseen at the time the contract was formed. An agreement to pay the higher price is

Accepted Answer

The agreement to pay a higher price is enforceable due to unforeseen difficulties. This is an exception to the preexisting duty rule, which generally states that a promise to do something you're already legally obligated to do is not considered valid consideration for a new promise. However, if unforeseen difficulties significantly change the nature of the performance, making it far more burdensome than could have been anticipated, courts may find that the modification of the contract is supported by new consideration because the circumstances have materially changed.

Question 9

Adequacy of consideration refers to

Accepted Answer

The answer of Adequacy of consideration refers to
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Question 10

Si promises to pay his personal assistant Tery $50,000 in consideration of the services she provided over the years. Si never makes the payment. Si's promise is

Accepted Answer

C) Si's promise is not enforceable because the consideration, which is the services Tery provided, is in the past. For a promise to be enforceable, consideration must be something that is bargained for and given in exchange for the promise at the time the promise is made. Past consideration is not considered valid consideration for the purposes of forming a contract.

Question 11

Bistro Caterers contracts with Corporate Towers to cater the firm's business meetings. Later, the contract between Bistro and Corporate is completely rescinded. Even later, Bistro offers to make a new deal. Corporate is willing to deal, but for a new price. Bistro and Corporate

Accepted Answer

Since the original contract was completely rescinded, both parties are free to negotiate a new contract with any terms they mutually agree upon, including a new price.

Question 12

Kris buys Liz's house for $300,000, which is the fair market value of the house. If the contract is later disputed in court, the court is likely to declare Kris's consideration

Accepted Answer

Consideration is legally sufficient if it involves a promise to do something one is not legally obligated to do or the refraining from doing something one has the right to do. Since Kris is paying the fair market value for the house, this constitutes legally sufficient consideration for the contract.

Question 13

Expo Center Inc. and Festival Music LLC have an executory contract. They agree to rescind it and simultaneously enter into a new contract. If the previous contract was subject to a preexisting duty, the new contract will most likely be

Accepted Answer

The answer of Expo Center Inc. and Festival Music LLC...

Question 14

Ros contracts with Spicy Pizza to deliver its products. After the deal has been partially performed, both parties inform each other that they would like to cancel the contract. Ros and Spicy may rescind

Accepted Answer

Ros and Spicy Pizza can rescind their contract to the extent that it is executory, meaning the parts of the contract that have not yet been performed. Once a contract has been executed, those parts cannot be rescinded.

Question 15

Raj defends against a breach-of-contract suit by Student Loan Corporation by claiming that their deal-a student loan-was unfair because the consideration for the contract was inadequate. With respect to Raj's defense, the court will most likely rule in favor of the lender on the ground that

Accepted Answer

The court will most likely rule in favor of the lender because the adequacy of the consideration (how much something is worth in a contract) is generally not something that courts decide on. The law assumes that adults can make their own agreements about the value of goods or services exchanged.

Question 16

Onsite Restoration Inc. begins renovating houses for Property Company under a contract for a stated amount per house. After six months, Onsite demands an extra $20,000 per house, stating no reason for the extra $20,000, but asserting that it will stop work if it is not paid. The agreement is

Accepted Answer

The preexisting duty rule states that a promise to do something that one is already legally obligated to do is not considered valid consideration for a new promise. In this case, Onsite Restoration Inc. is already under contract to renovate houses for a stated amount per house. Demanding extra payment without providing any new consideration (such as additional services) and threatening to stop work if not paid does not create a new valid contract but rather attempts to modify the existing one without valid consideration. Therefore, the agreement for the extra $20,000 per house is unenforceable due to the preexisting duty rule.

Question 17

Jen promises to pay Kam $500 because "she does not have as much money as other people." Jen's promise is

Accepted Answer

Jen's promise is not enforceable because for a contract to be valid, there must be consideration from both parties. In this scenario, Kam has not provided anything in return for Jen's promise, making the promise not legally binding.

Question 18

Sol offers Tiff $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely

Accepted Answer

Courts typically do not question the adequacy of the consideration as long as something of value is exchanged between the parties, which is the case here with the offer and acceptance of money for the coin collection.

Question 19

National Trucking Company begins transporting crude for Oil Inc. under a contract for a stated amount per load. After six months, National demands an increase in the stated amount because ordinary business expenses have increased. Oil's agreement to pay the increased amount is

Accepted Answer

The agreement to pay the increased amount is unenforceable due to the preexisting duty rule, which states that a promise to do something that one is already legally obligated to do is not considered valid consideration for a new promise. In this case, National Trucking Company was already under contract to transport crude for Oil Inc. for a stated amount per load, so their demand for more money does not constitute new consideration.

Question 20

Apps Inc. promises to give stock options to Belden, a creative coder, for processes he has already designed. This promise is

Accepted Answer

This promise is unenforceable because it is based on past consideration. In contract law, for a promise to be enforceable, there must be consideration, which is something of value exchanged between the parties. Past consideration refers to something that has already been done or provided before the promise is made, and it does not constitute valid consideration for a new contract.

Quiz 13: Consideration