Question 1

Joe and Jack have a written contract whereby Joe agrees to sell Jack a plot of land for $100,000.Later,without terminating the first contract,the parties modify the deal so that Joe sells Jack the same plot of land for $125,000.The second agreement is not a contract because:

Accepted Answer

The general common law rule on contract modifications holds that an agreement to modify an existing contract requires some new (independent)consideration to be binding.

Question 2

Why is past consideration not adequate consideration in a present promise?

Accepted Answer

Past consideration is an act or other benefit given in the past that was not given in exchange for the promise in question.Because the past act was not given in exchange for the present promise,it cannot be consideration.

Question 3

An agreement in which a party promises to supply all the other party's needs for a particular commodity is called a(n):

Accepted Answer

Requirements contracts are agreements in which one party promises to supply all the other party's needs for a particular commodity.

Question 4

A reaffirmation promise has to be made prior to the date of the discharge and gives the debtor the right to revoke his promise within 30 days after it becomes enforceable.This is the requirement of:

Accepted Answer

The Bankruptcy Reform Act of 1978 requires that a reaffirmation promise be made prior to the date of the discharge and gives the debtor the right to revoke his promise within 30 days after it becomes enforceable.

Question 5

Mr.Green is a local mobster who makes Mr.Blue pay $100 not to have his business burned to the ground.What is the status of the contract between Mr.Green and Mr.Blue?

Accepted Answer

Every member of society has a duty to obey the law and refrain from committing crimes or torts.Therefore,a promisee's promise not to commit such an act can never be consideration.Not burning down a business is a duty Mr.Green would have despite the contract.

Question 6

Which of the following is an element of promissory estoppel?

Accepted Answer

The elements of promissory estoppel were then essentially the same as they are today: a promise that the promisor should reasonably expect to induce reliance,reliance on the promise by the promisee,and injustice to the promisee as a result of that reliance.

Question 7

The general common law rule on contract modifications holds that an agreement to modify an existing contract requires a(n):

Accepted Answer

The most important preexisting duty cases are those involving preexisting contractual duties.The general common law rule on contract modifications holds that an agreement to modify an existing contract requires some new (independent)consideration to be binding.

Question 8

Patricia is a general contractor performing construction work for ABC Corp.Patricia requested extra payment because abnormal subsurface rock formations made excavation on the construction site far more costly and time-consuming than could have been reasonably expected.The court will:

Accepted Answer

Many courts enforce an agreement to modify an existing contract if the modification resulted from unforeseen circumstances that a party could not reasonably be expected to have foreseen,and which made that party's performance far more difficult than the parties originally anticipated.

Question 9

X and Y have a contract,which obligated X to sell Y 100 boxes of screws for $100.The parties orally modify the contract so that X will sell Y the same 100 boxes of screws for $125.The second agreement is:

Accepted Answer

Courts can enforce fair modification agreements by holding that the parties mutually agreed to terminate their original contract and then entered a new one.

Question 10

In which of the following circumstances is a debt settlement a binding contract?

Accepted Answer

A liquidated debt is a debt that is both due and certain;that is,the parties have no good faith dispute about either the existence or the amount of the original debt.

Question 11

Which of the following is true of preexisting contractual duties and their modification under the UCC?

Accepted Answer

The UCC and the CISG have similar rules regarding the modification of preexisting contracts where "mere agreement" is sufficient for modification.

Question 12

Which of the following is adequate consideration?

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.

Question 13

Able borrowed $10,000 from Baker,promising to return it with $1,000 interest on January 1,2006.There is no dispute that Able owes Baker $11,000 due on January 1,2006.On that day,Able gave Baker a valid check in the amount of $10,500 marked "payment in full for loan due January 1,2006." Baker accepted that check and deposited it into his account.If Baker then sues Able for the unpaid $500,what would the result be?

Accepted Answer

Baker is entitled to the $500 because Able has given no consideration to support Baker's implied promise to accept $10,500 as full payment.

Question 14

A contract that involves obligations on the part of manufacturers and distributors is called a(n):

Accepted Answer

According to the UCC,an exclusive dealing contract involves contractual obligations on the part of the manufacturer as well as the distributor.

Question 15

Helen worked for ABC Motors for 25 years.The president of ABC said to her: "In consideration of your past service for 25 years,I promise to give you a new car next week." However,he did not give the car.Is this promise legally enforceable?

Accepted Answer

Past consideration is an act or other benefit given in the past that was not given in exchange for the promise in question.Because the past act was not given in exchange for the present promise,it cannot be consideration.

Question 16

Which of the following is an exception to a consideration requirement?

Accepted Answer

Promises to make gifts for charitable or educational purposes are often enforced,despite the absence of consideration,when the institution or organization to which the promise was made has acted in reliance on the promised gift.

Question 17

The settlement of an unliquidated debt is called a(n):

Accepted Answer

The settlement of an unliquidated debt is called an accord and satisfaction.

Question 18

Ron was employed by Mass Co.in 1970.At that time,he was given an employee handbook that described the particular steps that had to be taken before an employee could be fired.Later,in 2000,Mass published a new handbook by which all workers' statuses were changed to at-will employees.Mass then fired Ron.Ron claimed he was terminated without cause and was not afforded procedures described in the 1970 handbook,such as an appeal or review of the decision.He sued Mass under breach of contract based upon the 1970 employee handbook.Will he succeed?

Accepted Answer

Modifications to contracts need to be mutual in order to be valid and enforceable.In this case,it is not so and therefore invalid.

Question 19

Gift promises are not generally enforceable because they lack:

Accepted Answer

Gift promises do not have any consideration and are hence,unenforceable.However,exception is made in the case of a promissory estoppel or public policy.

Question 20

Can a local businessman pay a police officer $50 a week to watch his business more closely?

Accepted Answer

A public official cannot use their public duty as consideration on a contract for services.

Quiz 12: Consideration