Question 1

Contracts in which one party to the agreement agrees to buy all of the other party's production of a particular commodity is called a(n):

Accepted Answer

Contracts in which one party to the agreement agrees to buy all of the other party's production of a particular commodity are called output contracts.

Question 2

Consideration can be a(n)________ in the case of a bilateral contract.

Accepted Answer

Consideration can be an act in the case of a unilateral contract or a promise in the case of a bilateral contract.

Question 3

Daniel is a senior at State University.Brian,Daniel's father,is concerned about Daniel's study habits,given that Daniel spends most of his evenings at the campus pub instead of the library.Brian promises Daniel that he will send him on an expense-paid trip to Europe after his graduation if Daniel spends at least five evenings a week studying in the campus library for the remainder of his senior year.After returning home from his graduation,Daniel asks Brian about the European trip.Brian replies,"Your education was your reward.I don't owe you a trip to Europe." Brian is:

Accepted Answer

If,in exchange for the promisor's promise,the promisee refrains from doing,or agrees not to do,something he/she has a legal right to do,that provides legal value.This definition does not require that an act or a promise have monetary value to amount to consideration.Daniel's act of keeping his father's request exchange for the promise the latter has made is enough consideration for the promise to be binding and enforceable.

Question 4

Which of the following is true of consideration?

Accepted Answer

Gross inadequacy of consideration may give rise to an inference of fraud,duress,lack of capacity,unconscionability,or some other independent basis for setting aside a contract.

Question 5

Historically,free promises were not enforced unless they had which of the following supporting them?

Accepted Answer

Free (gratuitous)promises were historically not enforced unless attached with consideration.

Question 6

James owns Great Expectations,a trendy restaurant in Manhattan.He enters into a contract with Mary,who makes and sells pastries.The contract states that Mary will "supply all of Great Expectation's needs" for pastries for the next year.Is this contract enforceable?

Accepted Answer

Contracts that promise to supply all the requirements of another party's needs for a commodity are called requirements contract.These contracts are valid and enforceable agreements.

Question 7

Mr.White contracts with his wife Ms.White to watch their kids,Joe and Jimmy,one night for $50.What is the status of the contract between Mr.White and Ms.White?

Accepted Answer

An individual cannot offer as consideration a duty they are required to perform under the law.A parent is required to watch their children in this scenario.

Question 8

Sigmund enters into a contract with Carl.The terms are that Sigmund will purchase all the gasoline that he wants to purchase in 2011 at a price of $2.50 per gallon,and Carl agrees to sell on those terms.This is an example of a(n):

Accepted Answer

For a promise to serve as consideration in a bilateral contract,the promisee must have promised to do something at the promisor's request.It is obvious that if the promisee's promise is illusory because it really does not bind the promisee to do anything,such a promise could not serve as consideration.Such agreements are often said to lack the mutuality of obligation required for an agreement to be enforceable.

Question 9

For the consideration requirement in contracts to be met:

Accepted Answer

The requirement of consideration means that a promisee must pay the price that the promisor asked to gain the right to enforce the promisor's promise.So,if the promisor did not ask for anything in exchange for making him promise or if what the promisor asked for did not have legal value,his promise is not enforceable against him because it is not supported by consideration.

Question 10

John promised the other co-owners of the ship Sea Fairy that he would insure the ship for an upcoming voyage.However,John fails to insure the ship.The ship is shipwrecked in a turbulent sea.The co-owners sue John for breach of contract.Will they succeed?

Accepted Answer

John's promise was purely gratuitous;he had neither asked for nor received anything in exchange for making it.Therefore,it was unenforceable because it was not supported by consideration.

Question 11

Jack went to the ABC Casino to gamble.ABC offers its customers one free spin of the Million Dollar Wheel if they fill out an application form.Jack filled out the form,spun the Million Dollar Wheel,and won.However,now ABC refuses to pay,claiming that because Jack did not purchase his chance at the Million Dollar Wheel,Jack gave no consideration and therefore,no contract was formed.Identify the accurate statement.

Accepted Answer

Jack has fulfilled the legal value stated in the promise by ABC by filling out the application form.Hence,he is entitled to his reward.

Question 12

To satisfy the consideration requirement to form a contract,the consideration exchanged by the parties must:

Accepted Answer

Consideration is legal value,bargained for and given in exchange for an act or promise.

Question 13

As mentioned in the case in the text,Steinberg v.U.S. ,in deciding whether consideration to form a contract exists,a court must determine whether:

Accepted Answer

If a benefit is not bargained for,it cannot constitute consideration necessary to support a contract.

Question 14

Chica,a women's clothing store,held a "prize drawing" for a $500 shopping spree on Saturday that it advertised throughout the week.Participation in the drawing required being at the store by noon and completing an application form that included personal information.The information would then be put into a database for marketing purposes.Fashion consultants offering merchandise for sale greeted customers arriving at the store on Saturday morning.Joy was the winner of the drawing.Has she given consideration for the prize?

Accepted Answer

Joy provided legal value to the exchange/promise by coming to the store and providing information that the store wanted from the customers.

Question 15

Daniel owes Casey a debt,the amount of which is subject to a good faith dispute.The parties agree to settle the debt,with Daniel promising to pay Casey $15,000 and Casey promising to release Daniel on a $25,000 debt.The settlement agreement:

Accepted Answer

A good-faith dispute about either the existence or the amount of a debt makes the debt an unliquidated debt.The settlement of an unliquidated debt is called an accord and satisfaction and satisfies the consideration requirement.When an accord and satisfaction has occurred,the creditor cannot maintain an action to recover the remainder of the debt that he alleges is due.

Question 16

Consideration can be a(n)________ in the case of a unilateral contract.

Accepted Answer

Consideration is an act in the case of a unilateral contract and a promise in the case of a bilateral one.

Question 17

Which of the following meets the requirements of consideration?

Accepted Answer

Consideration involves the exchange of a legal value;a promise to refrain from crimes,to engage in a preexisting duty,or one without a binding obligation is not deemed a consideration.

Question 18

Dan,President of BAZ Co. ,is happy with the extraordinary performance of Naomi,a BAZ Co.senior accountant.Dan informs Naomi that because of her superlative work in the past fiscal year,he is going to give her a 5 percent raise effective next month.Naomi,who has never heard of anyone at BAZ Co.getting a raise,is thrilled and thanks Dan.Later that day,Dan realizes that giving Naomi this raise might cause all senior accountants to demand salary increases.Dan decides not to give Naomi a raise after all.He believes that his promise to give her a raise is not legally binding.Dan is correct because:

Accepted Answer

The fact that a promisee's act or promise provides legal value is not,in itself,a sufficient basis for finding that it amounted to consideration.In addition,the promisee's act or promise must have been bargained for and given in exchange for the promisor's promise.In effect,it must be the price that the promisor asked for in exchange for making his promise.

Question 19

Which of the following is often used by agreements that try to make gratuitous promises look like true bargains?

Accepted Answer

When agreements try to make gratuitous promises look like true bargains,they make use of nominal considerations.Courts generally refuse to enforce such agreements unless they find that the stated consideration was actually bargained for.

Question 20

Bill is 25 years old.His uncle promised in writing to pay him $2,000 if Bill would refrain from drinking alcohol for one year.Bill refrained from drinking alcohol for one year.However,his uncle now refuses to pay Bill as they agreed.The uncle claims that because Bill suffered no detriment by refraining from alcohol,his non-drinking does not constitute legal consideration,and,therefore,no contract was formed.If Bill sues his uncle,Bill will:

Accepted Answer

If,in exchange for the promisor's promise,the promisee refrains from doing,or agrees not to do,something he/she has a legal right to do,that provides legal value.This definition does not require that an act or a promise have monetary value to amount to consideration.Bill refrained from drinking alcohol,even though he may have benefited from so refraining.He had a legal right to indulge in such activities,yet he refrained from doing so at his uncle's request and in exchange for his uncle's promise.This was all that was required for consideration.

Quiz 12: Consideration

Contracts in which one party to the agreement agrees to buy all of the other party's production of a particular commodity is called a(n) :

Consideration can be a(n) ________ in the case of a bilateral contract.