Question 1

Fact Pattern 10-4  Rex contracts with Spicy Pizza to deliver its products. Later, both parties inform each other that they would like to cancel the contract.
Refer to Fact Pattern 10-4. Rex and Spicy
A) may rescind their entire contract.
B) may rescind their contract to the extent that it is executory.
C) must perform their entire contract.
D) must perform the part of their contract that is executory.

Accepted Answer

The answer of Fact Pattern 10-4  Rex contracts with Spicy...

Question 2

Under a contract with Red Wines, Sancho begins grading a terraced hillside for the planting of grapes. Halfway through the project, Sancho asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." Red agrees but later refuses to pay. Red's agreement to pay more is
A) unenforceable because Sancho's performance was a preexisting duty.
B) unenforceable because Red's promise was illusory.
C) enforceable.
D) unenforceable because Sancho's request modified the contract.

Accepted Answer

Sancho's performance was a preexisting duty under the original contract, and thus, Red's agreement to pay more is unenforceable without additional consideration.

Question 3

Fact Pattern 10-2 Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan-was unfair because the consideration for the contract was inadequate.
Refer to Fact Pattern 10-2. With respect to Brad's defense, the court will most likely
A) promise to do something that it has no prior legal duty to do.
B) perform an action that it is not otherwise legally obligated to undertake.
C) refrain from allowing the contract to be enforced.
D) permit the contract to be enforced.

Accepted Answer

Courts generally do not assess the adequacy of consideration in a contract unless there is evidence of fraud, duress, or unconscionability. If the consideration is legally sufficient, the contract is likely to be enforced.

Question 4

EcoEnergy LLC files a suit against Fiber Optics Inc., claiming that the consideration for their contract is inadequate. Most likely, the court will
A) evaluate the fairness of the bargain.
B) ask "how much" consideration was given.
C) not question the adequacy of consideration.
D) not determine whether consideration was exchanged.

Accepted Answer

Courts typically do not evaluate the adequacy of consideration as long as it is legally sufficient, meaning that something of value was exchanged. The fairness or amount of consideration is generally not questioned.

Question 5

Fact Pattern 10 - 3 Best Restoration, Inc., begins renovating houses for City Edge Property Company under a contract for a stated amount per house. After six months, Best demands an extra $20,000 per house. City Edge agrees to pay.
Refer to Fact Pattern 10 - 3. Suppose Best offers no reason for the extra $20,000, but asserts that it will stop work if it is not paid. The agreement is
A) enforceable as the consideration is past.
B) enforceable due to unforeseen difficulties.
C) unenforceable as an illusory promise.
D) unenforceable due to the preexisting duty rule.

Accepted Answer

The agreement is unenforceable due to the preexisting duty rule, which states that a party cannot demand additional compensation for performing a duty they are already contractually obligated to perform.

Question 6

Fact Pattern 10-4  Rex contracts with Spicy Pizza to deliver its products. Later, both parties inform each other that they would like to cancel the contract.
Refer to Fact Pattern 10-4. The contract between Rex and Spicy is completely rescinded. Later, Rex offers to make a new deal to deliver Spicy's products. Spicy is willing to deal, but for a new price. Rex and Spicy
A) may agree to a new contract, but it cannot include a new price.
B) may agree to a new contract that includes the new price.
C) must perform their original contract.
D) must perform the part of their original contract that is executory.

Accepted Answer

Since the original contract was rescinded, Rex and Spicy are free to negotiate a new contract with new terms, including a new price.

Question 7

Fact Pattern 10-2 Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan-was unfair because the consideration for the contract was inadequate.
Refer to Fact Pattern 10-2. "Adequacy" of consideration refers to
A) "how much" consideration is given.
B) legally sufficient value in the eyes of the law.
C) the intangible value to a contracting party of a thing exchanged.
D) the substantiality of the consideration exchanged.

Accepted Answer

Adequacy of consideration refers to "how much" consideration is given, focusing on the fairness or equivalence of the exchange in the contract.

Question 8

Sam offers Tiffany $10,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely
A) enforce the deal after questioning the adequacy of consideration.
B) not question the adequacy of the consideration.
C) rewrite the deal after questioning the adequacy of consideration.
D) set aside the deal after questioning the adequacy of consideration.

Accepted Answer

Courts typically do not question the adequacy of consideration as long as it is legally sufficient, meaning both parties have agreed to the terms and there is some value exchanged.

Question 9

Sean promises to pay his personal assistant Terry $50,000 in consideration of the services she provided over the years. Sean never makes the payment. Sean's promise is
A) enforceable for the entire $50,000.
B) enforceable to the extent of what Terry's services were actually worth.
C) not enforceable because the consideration is in the past.
D) not enforceable because the failure to pay is an unforeseen difficulty.

Accepted Answer

The answer of Sean promises to pay his personal assistant...

Question 10

A fire threatens to engulf a commercial building in Metro City. The building's owner promises a cash reward to the Metro Fire Department to extinguish the fire. The firefighters cannot claim the reward because
A) extinguishing the fire is the firefighters' preexisting duty.
B) extinguishing the fire represents past consideration.
C) extinguishing the fire is a foreseen difficulty.
D) the promise of a cash reward is illusory.

Accepted Answer

Extinguishing the fire is the firefighters' preexisting duty. They are already obligated by their job to put out fires, and cannot claim extra compensation for doing what is expected of them.

Question 11

Cindy, a real estate agent, sells her friend Doug's house without charging a commission. Weeks later in return Doug promises to give Cindy $1,000. This promise is not an enforceable contract because
A) the house has already been sold-the consideration is past.
B) selling the house was the agent's preexisting duty.
C) selling the house was a foreseen difficulty.
D) the promise of a payment of $1,000 is illusory.

Accepted Answer

The promise is not enforceable because the consideration (selling the house) is past, meaning it was completed before the promise of payment was made. Past consideration is not valid consideration for a contract.

Question 12

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
A) collect it.
B) not collect it because she had a preexisting duty to capture Oscar.
C) not collect it because it is not legally sufficient consideration.
D) not collect it because it is an illusory promise.

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 13

Frank offers to buy a guitar owned by Holly for twice what she paid for it. She accepts and hands the guitar to Frank. Holly's delivery of the guitar is
A) not consideration because its adequacy is unfair.
B) not consideration because the exchange is not a bargain.
C) consideration.
D) not consideration because the value is not legally sufficient.

Accepted Answer

Holly's delivery of the guitar to Frank is consideration because she is providing something of value (the guitar) in exchange for something of value (twice what she paid for it). The adequacy of the exchange is not relevant to whether there is consideration, as long as both parties are getting something they perceive as valuable. Additionally, the fact that Frank is paying twice what Holly paid for the guitar suggests that the value is legally sufficient.

Question 14

Jen promises to pay Kay $500 because "she does not have as much money as other people." Jen's promise is
A) enforceable because society wants people to keep their promises.
B) enforceable because the redistribution of wealth is a valid social goal.
C) not enforceable because Jen could have paid Kyle more.
D) not enforceable because Kay has not given consideration in return.

Accepted Answer

Jen's promise to pay Kay is not enforceable because Kay has not given consideration in return. Consideration is something of value exchanged between parties to a contract. In this case, Kay has not provided anything of value to Jen in exchange for the promise to pay $500, and therefore the promise is not legally binding.

Question 15

Business Center Inc. and Catering 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
A) invalid.
B) enforceable.
C) valid.
D) voidable.

Accepted Answer

The answer of Business Center Inc. and Catering LLC have...

Question 16

Fact Pattern 10 - 3 Best Restoration, Inc., begins renovating houses for City Edge Property Company under a contract for a stated amount per house. After six months, Best demands an extra $20,000 per house. City Edge agrees to pay.
Refer to Fact Pattern 10 - 3. Suppose Best asks for the extra $20,000 because ordinary business expenses have increased. The agreement is
A) enforceable as the consideration is past.
B) enforceable due to unforeseen difficulties.
C) unenforceable as an illusory promise.
D) unenforceable due to the preexisting duty rule.

Accepted Answer

The agreement is unenforceable due to the preexisting duty rule, which states that a party cannot demand additional compensation for performing a duty they are already contractually obligated to perform.

Question 17

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
A) objectively worthy.
B) precisely adequate.
C) legally sufficient.
D) practically sound.

Accepted Answer

Consideration must be legally sufficient, meaning it has some value in the eyes of the law. It does not need to be precisely adequate, meaning an exact match in value between what is being exchanged, and it does not need to be practically sound, meaning it may not necessarily make practical sense. However, it must be objectively worthy, meaning it has some actual value, which is why the best answer is C.

Question 18

Apps Inc. promises to give stock options to Belden, a creative coder, for processes he has already designed. This promise is
A) enforceable because it is a new contract.
B) enforceable because it is an illusory promise.
C) enforceable because it is supported by past consideration.
D) unenforceable.

Accepted Answer

Stock options promised for past work or processes already designed are not considered valid consideration in most jurisdictions. Therefore, the promise is unenforceable.

Question 19

Fact Pattern 10 - 3 Best Restoration, Inc., begins renovating houses for City Edge Property Company under a contract for a stated amount per house. After six months, Best demands an extra $20,000 per house. City Edge agrees to pay.
Refer to Fact Pattern 10 - 3. Suppose Best asks for the extra $20,000 because of extraordinary difficulties that were totally unforeseen at the time the contract was formed. The agreement is
A) enforceable as the consideration is past.
B) enforceable due to unforeseen difficulties.
C) unenforceable as an illusory promise.
D) unenforceable due to the preexisting duty rule.

Accepted Answer

The agreement is enforceable due to unforeseen difficulties, which can justify a modification of the contract terms.

Question 20

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
A) inadequate.
B) past.
C) legally sufficient.
D) illusory.

Accepted Answer

Kris's consideration of $300,000 is legally sufficient because it represents the fair market value of the house. In order for a contract to be valid, there must be legally sufficient consideration, which means that it must have some value in the eyes of the law. In this case, the consideration of $300,000 meets that requirement, making it legally sufficient. Adequate consideration, on the other hand, refers to whether the consideration is fair and reasonable. Past consideration refers to consideration that has already been provided, and illusory consideration refers to consideration that is uncertain or vague. Neither of these concepts are relevant in this scenario, making choice C the correct answer.

Quiz 10: Consideration

Fact Pattern 10-4 Rex contracts with Spicy Pizza to deliver its products. Later, both parties inform each other that they would like to cancel the contract. Refer to Fact Pattern 10-4. Rex and Spicy

Fact Pattern 10-2 Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan-was unfair because the consideration for the contract was inadequate. Refer to Fact Pattern 10-2. With respect to Brad's defense, the court will most likely

EcoEnergy LLC files a suit against Fiber Optics Inc., claiming that the consideration for their contract is inadequate. Most likely, the court will

Fact Pattern 10-2 Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan-was unfair because the consideration for the contract was inadequate. Refer to Fact Pattern 10-2. "Adequacy" of consideration refers to

Sam offers Tiffany $10,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely

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

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

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

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

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

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

Business Center Inc. and Catering 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

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

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

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