ACCT MODULE 15

Currently, how many states will still enforce contract under seal even if it is not supported by consideration? 50 10 48 2

10

If a business does inadvertently cash a "paid-in-full" check, it has ______ days to offer the debtor repayment in the same amount. 120 30 90 60

90

What are two exceptions to the rule requiring consideration? A bilateral contract and a unilateral contract. Promissory estoppel and an illusory contract. A contract under seal and promissory estoppel. A contract under seal and an illusory contract. A contract under seal and a contract involving a liquidated debt.

A contract under seal and promissory estoppel.

Which of the following statements are true of legal consideration? (Check all that apply.) A court will not regulate the amount of consideration in the absence of fraud. Any consideration, however small, will support a promise. As a general rule, a contract need not be supported by consideration in order for it to be binding. The consideration of love and affection has been deemed insufficient to support a conveyance.

A court will not regulate the amount of consideration in the absence of fraud. Any consideration, however small, will support a promise.

Which of the following is true regarding the effect of a debtor offering to pay a different type of payment, for example, goods instead of money, on a debt for which there is not a dispute over the amount or existence of the debt, and the creditor agrees? A liquidated debt is involved, and there is an accord and satisfaction.Correct A liquidated debt is involved, and there is an accord but no satisfaction. A liquidated debt is involved, and there is not a satisfaction or an accord. An unliquidated debt is involved, and there is an accord and satisfaction.Incorrect An unliquidated debt is involved, and there is an accord but not satisfaction.

A liquidated debt is involved, and there is an accord and satisfaction.

What are the conditions for promissory estoppel to occur? (Check all that apply.) A party reasonably relies on another's promise. To avoid an injustice, the promise must be enforced. One party makes a promise and knows the other party will rely on it. A promise is exchanged for a promise.

A party reasonably relies on another's promise. To avoid an injustice, the promise must be enforced. One party makes a promise and knows the other party will rely on it.

Which of the following is not an type of consideration? Multiple choice question. A promise to accept a gift A detriment to the promisor A promise to refrain from doing something A benefit to the promisee

A promise to accept a gift

Which of the following is a correct statement regarding a promise to refrain from doing something you are legally entitled to do? A promise to not do something you are otherwise legally entitled to do is good consideration for a contract, but only if it is equal in value to the other party's promise. A promise to not do something you are otherwise legally entitled to do is good consideration for a contract. A promise to not do something you are otherwise legally entitled to do is good consideration for a contract, but only if the contract involves goods and not services. A promise to not do something you are otherwise legally entitled to do is good consideration for a contract, but only if the contract involves services and not goods.

A promise to not do something you are otherwise legally entitled to do is good consideration for a contract.

Which of the following is true about a bilateral contract? (Check all that apply.) A promise standing alone with nothing in return is sufficient consideration. A promise to perform has value. A promise in exchange for a promise can be consideration. It is never an oral contract.

A promise to perform has value. A promise in exchange for a promise can be consideration.

Andy is an artist and Jane runs a famous art gallery. Jane calls Andy and tells him she has seen some of his work and likes it. She tells him to bring his newest paintings to her gallery and says "I promise that if I like them, I will show them in my gallery." Which of the following is true? (Check all that apply.) Andy has no contract to compel Jane to show his paintings in the gallery. If Andy's paintings are good, Jane must show them in the gallery. Jane must show the paintings in the gallery regardless of whether she likes them. Jane made an illusory promise.

Andy has no contract to compel Jane to show his paintings in the gallery. Jane made an illusory promise.

Anna promises Elsa that she will clean Elsa's house and Elsa promises Anna she will pay Anna $100 when Anna is done. Which of the following is true? (Check all that apply) Anna and Elsa's promises are an exchange of something of value. There is no contract because there is no consideration. Anna and Elsa have formed a bilateral contract. Anna's promise in exchange for Elsa's promise is sufficient consideration.

Anna and Elsa's promises are an exchange of something of value. Anna and Elsa have formed a bilateral contract. Anna's promise in exchange for Elsa's promise is sufficient consideration.

Scott needs his cars washed by tomorrow afternoon, so he calls Betty and tells her he'll pay her $100 if she washes both cars the next morning. Betty tells Scott, "I'll do it if I wake up in time." Which of the following statements is true? Scott's promise to pay Betty $100 is an executed unilateral contract. Betty has not promised to wash Scott's cars. Betty and Scott have formed a binding contract supported by consideration. Betty has promised to wash Scott's cars.

Betty has not promised to wash Scott's cars.

Nina, an experienced pool contractor, and Charlie agree on a price for Nina to build a pool in Charlie's backyard. Nina discovers that she did not initially include a sufficient charge for labor in her original price. She informs Charlie that unless she receives an extra $5,000 with which to hire workers, she cannot complete the job. Charlie agrees, thinking to himself that he has a way out. When Nina finishes the pool, Charlie refuses to pay the additional $5,000. Which of the following is the most likely result of their dispute? Charlie will be required to pay because a typical, unilateral contract is involved, and he got the benefit of his bargain. Charlie will be required to pay because a typical, bilateral contract is involved, and he got the benefit of his bargain. Charlie will be required to pay because unforeseen circumstances are an exception to the preexisting duty rule. Charlie will not be required to pay because Nina provided no additional consideration, and the preexisting duty rule applies. Charlie will only be required to pay ½ of the agreed upon amounts because of the calculations involved under the preexisting duty rule.

Charlie will not be required to pay because Nina provided no additional consideration, and the preexisting duty rule applies.

A promise to refrain from doing something is sufficient: _______. determination conditioning consideration deliberation

Consideration

Sameer promises his uncle, Farouk, that he will study every day and earn straight A's during the spring semester in exchange for having his tuition paid for the fall semester. Farouk agrees, but after Sameer studies all semester and receives straight A's, Farouk refuses to pay, saying that no such contract ever existed. Which of the following is true? Consideration was present, there was an enforceable contract, and Farouk has wrongfully refused to pay. There was no consideration present, and Farouk has no obligation to pay. There was no consideration present, but Farouk must pay under principles of promissory estoppel. There was consideration present, but Farouk is not required to pay because the contract was illusory. There was consideration present, but Farouk is not required to pay because he did not receive a benefit personally.

Consideration was present, there was an enforceable contract, and Farouk has wrongfully refused to pay.

Sheila tells Ed that if Ed repairs her air conditioner by the end of the day, Sheila will pay Ed $500. Which of the following is true? Ed and Sheila have entered into a valid bilateral contract. There is no contract because there is no consideration. Ed and Sheila have entered into a valid unilateral contract. If Ed fixes the air conditioner by the end of the day, Sheila does not have to pay him.

Ed and Sheila have entered into a valid unilateral contract.

T/F An illusory promise can constitute consideration in some contracts.

False

True or False: The court will never look at adequacy of consideration as long as at least one party has given some detriment.

False

In some cases, if past consideration was given with the expectation of ______ payment, the court may enforce the promise. future gratuitous honorary no

Future

William tells his neighbor George that he will give George a job as his butler if George promises to drop out of college. Which of the following is true? George's promise to refrain from going to college is consideration. This is an unenforceable contract due to public policy favoring education. George's promise to refrain from going to college is not consideration. William's promise is not enforceable.

George's promise to refrain from going to college is consideration.

If a check is marked "paid in full," which of the following is true under the UCC? If a business inadvertently cashes such a check, the business has 30 days from the date it cashed that check to offer repayment in the same amount to the debtor to avoid an accord and satisfaction. If a business inadvertently cashes such a check, the business has 60 days from the date it cashed that check to offer repayment in the same amount to the debtor to avoid an accord and satisfaction. If a business inadvertently cashes such a check, the business has 90 days from the date it cashed that check to offer repayment in the same amount to the debtor to avoid an accord and satisfaction. If a business inadvertently cashes such a check, the business has 120 days from the date it cashed that check to offer repayment in the same amount to the debtor to avoid an accord and satisfaction. The business has no recourse, and the debt is deemed discharged and satisfied.

If a business inadvertently cashes such a check, the business has 90 days from the date it cashed that check to offer repayment in the same amount to the debtor to avoid an accord and satisfaction.

When does the court look at the adequacy of consideration in a contract? (Check all that apply.) If the court thinks that the deal was not profitable for all the parties involved If the court thinks that one party made a good bargain If the court thinks that undue influence was used If the court believes fraud occurred

If the court thinks that undue influence was used If the court believes fraud occurred

Which of the following is true about a unilateral contract? (Check all that apply.) It is a real contract because it is a mutual exchange of value. It is a promise in exchange for performance. It is not a real contract because it lacks consideration. It refers to a promise for a promise.

It is a real contract because it is a mutual exchange of value. It is a promise in exchange for performance.

Identify the true statements about past consideration. (Check all that apply.) It is enforceable if a party unexpectedly benefits from the past consideration provided by the other party. It is enforceable if the circumstances of the party that provided the past consideration change. It is enforceable if it was given with the expectation of future payment. It is enforceable to the extent necessary to avoid injustice.

It is enforceable if it was given with the expectation of future payment. It is enforceable to the extent necessary to avoid injustice.

Which of the following statements is true about past consideration? (Check all that apply.) It refers to a situation where one party provides value before the promise is made. It is sufficient consideration to support a present contract, but only if it was provided to the other party within one year before the present contract. It is not real consideration. It is sufficient consideration to support a present contract, but only if the present contract involves a sale of goods transaction, and not the provision of services.

It refers to a situation where one party provides value before the promise is made. It is not real consideration.

Joan teaches Bobby how to shoot an outside jump shot in basketball. Bobby becomes such a good basketball player that he is awarded a full college scholarship and becomes highly sought-after by professional teams. Just before he signs a contract with a professional team, Bobby tells Joan, "I promise I'll give you $500,000 when I sign that contract. I owe you for teaching me that jump shot." Which of the following is true? Although Bobby does not owe Joan $500,000, he does owe her the reasonable value of her coaching services. Joan is entitled to $500,000 from Bobby when he signs his professional contract. Bobby can claim undue influence as a defense to the contract. Joan's work with Bobby in the past is not consideration to enforce Bobby's promise.

Joan's work with Bobby in the past is not consideration to enforce Bobby's promise.

If there is no dispute about the fact that money is owed and the amount of money owed in a contract, this is considered a(n) ____________ debt. actual accepted positive liquidated unliquidated

Liquidated

Patty and Mario dispute whether Patty owes Mario $1,000. Patty asks Mario if she can give him her gold necklace, worth $500, in full payment of the debt. Mario agrees and takes the gold necklace. Which of the following is true? Mario must give the necklace back to Patty. Patty has committed fraud. Patty still owes Mario $500 after giving him the gold necklace. Mario taking the necklace constitutes an accord and satisfaction.

Mario taking the necklace constitutes an accord and satisfaction.

Raphael, who owes $10,000 to his credit card company, sends a check to the credit card company for $50 and marks the check "paid in full." The credit card company inadvertently cashes the check, but the mistake is caught two weeks later and they offer to repay Raphael his $50. Raphael does not respond. Does accord and satisfaction exist? Yes, because the bank cashed the check and this is sufficient for accord and satisfaction. Yes, because Raphael did not accept the bank's offer for repayment. Yes, because the bank has to offer a refund to Raphael within one week to avoid accord and satisfaction. No, because the $50 payment accounted for less than 10 percent of the balance due. No, because the bank offered to repay the money in a timely manner.

No, because the bank offered to repay the money in a timely manner.

Genny and Luke contract for Luke to build a home for Genny. Luke promises to build the house for $100,000 but a neighboring forest fire destroys the framing during construction. Luke must reframe the house. Does the preexisting duty rule prevent Luke from enforcing a contract in which he charges additional money to Genny? Yes, because he has a preexisting duty to build the house and took the chance of an issue during the building process. Yes, because there are no exceptions to the preexisting duty rule, especially in contracts for the sale of land and houses. No, Article 2 of the UCC does not allow for enforcement of this contract. No, because there are unforeseen circumstances (the forest fire) which require additional work (reframing the house). No, a court would deem that he was under contract and it would unjustly enrich Luke to charge more money to reframe the house.

No, because there are unforeseen circumstances (the forest fire) which require additional work (reframing the house).

Leslie sold Tom "her" house for $250,000, but lied to Tom because she did not actually own the house. The court is likely to: ______. order Tom to pay the actual owner of the property $250,000 not enforce the contract order Leslie to buy the property from the true owner for $250,000 and give it to Tom enforce the contract and make Tom pay Leslie $250,000

Not enforce the contract

Jeremy promises Gillian a job if she moves to California for the job. Gillian, excited for the new job, quits her current job and moves across the country to California in reliance on Jeremy's promise of the new job. Jeremy, however, tells Gillian once she gets to California, he has no job for her. Which doctrine might Gillian use to sue Jeremy? Unjust agreement Promissory estoppel Quasi contract Equitable estoppel Promissory enforcement

Promissory estoppel

Upon graduating from college, Anum receives a job offer across the country and moves there, giving up her apartment and cancelling all her other job interviews in the process. After she arrives, she is informed that there is no job. In most states, what may she recover? Nothing Reliance damages Liquidated damages Acknowledged damages Approved damages

Reliance damages

Promissory estoppel and contracts under ______ are two exceptions to the common law rule requiring consideration. seal subjective interpretation recognizance ratification

Seal

Which of the following was the result in the case in the text Hamer v. Sidway, in which, after performance by his nephew, an uncle reneged on a promise to the nephew to pay him $5,000 if the nephew refrained from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he was 21 years of age? That because refraining from the conduct at issue benefited his character and health, the nephew could not recover. That no consideration was involved, and the nephew could not recover because the consideration from him did not consist of money or goods. That no consideration was involved, and the nephew could not recover because the proof established that the nephew had no interest in engaging in the items at issue, and avoiding them was no detriment to him. That the nephew could recover because he supplied consideration. That the nephew could recover, but only under promissory estoppel could he recover an amount compensating him for his reliance on the promise.

That the nephew could recover because he supplied consideration.

Which of the following was the result on appeal in the Case Opener involving the alleged breach of an oral contract based on the plaintiff lawyer loaning a corporate client funds and the client later reneging on a promise, made in gratitude, to give the lawyer three percent of the company's stock? That the promise to transfer the stock flowed from the loan transaction and was enforceable by the plaintiff. That the promise was unenforceable because lawyers may not loan clients money. That the promise was enforceable only if the total the plaintiff received in funds did not violate state usury laws involving maximum interest rates. That the promise was not enforceable because it was a gift. That the promise was enforceable as a gift.

That the promise was not enforceable because it was a gift.

Gabrielle is three months behind on her mortgage, and her lender filed negative information affecting her credit rating. Gabrielle mailed one monthly payment to the lender along with a letter stating that she was making the payment on the condition that the lender remove negative material sent to credit reporting agencies affecting her credit rating. The lender cashed the check but did not remove the negative information. Gabrielle sues the bank for breach of contract. Which of the following is the most likely result?

The bank will win because under the preexisting duty rule, Gabrielle was already legally obligated to make the payment, and there was no consideration to support the contract.

Phil tells Gloria that if she works for him full-time, he'll pay her $1,000 a week. As a result and based on Phil's promise, Gloria quits her job at the department store and puts a down payment on a car. When Gloria shows up at Phil's to start work, Phil tells her he's changed his mind about the full-time job. Which of the following is correct regarding this scenario? The best way for Gloria to enforce Phil's promise is to assert promissory estoppel. Phil's promise is enforceable because it is supported by mutually agreed-upon and exchanged consideration. Gloria has no legal or equitable remedy since it was unreasonable for her to quit her job and put a down payment on a car. Phil's promise is entirely unenforceable because it was not in writing.

The best way for Gloria to enforce Phil's promise is to assert promissory estoppel.

Which of the following was the result on appeal in Thelma Agnes Smith v. David Phillip Riley, the case in the text in which the plaintiff who had lived with the defendant out of wedlock for several years sought to enforce two agreements regarding the sale and assignment of property to her after the couple broke up? The court ruled in favor of the defendant on the basis that a recitation of nominal consideration of $1 along with love and affection was insufficient consideration to support a conveyance. The court ruled in favor of the plaintiff on the basis that a recitation of nominal consideration of $1 along with consideration of love and affection was adequate consideration to support the agreements. The court ruled in favor of the defendant on the basis that the plaintiff's previous deposit of funds into a joint checking account was insufficient consideration for the later agreements. The court ruled in favor of the plaintiff on the basis that the plaintiff's previous deposit of funds into a joint checking account was sufficient consideration for the later agreements. The court ordered the parties to divide on a 50/50 basis the assets in question based on their domestic partnership.

The court ruled in favor of the plaintiff on the basis that a recitation of nominal consideration of $1 along with consideration of love and affection was adequate consideration to support the agreements.

Walter contracts to purchase Marie's mansion and estate for $50,000. Marie's mansion and estate has a property tax value of $1 million. There is no fraud or undue influence involved in the transaction. Which of the following is an incorrect statement regarding the enforcement of this contract? The court will find the $50,000 an insufficient amount of consideration and cancel the contract. The court will not question the value of the exchanged consideration. The $50,000 is just as sufficient and valuable as a larger sum to support the legal enforcement of this contract. The consideration for the contract is the mansion.

The court will find the $50,000 an insufficient amount of consideration and cancel the contract.

Which of the following is true about a partial payment of a liquidated debt? The debt remains outstanding. The rest of the debt is forgiven if the partial payment is accepted. If more than 50% of the debt is paid, the debt is fully paid. Liquidated debt is a product of fraud.

The debt remains outstanding.

Forrest hires Nadine to turn his basement into a family room for $50,000. About halfway through the work, Nadine discovers for the first time that the wood in the floor of the basement is riddled with mold and all the wood must be removed and replaced. Nadine tells Forrest that it will cost him an additional $10,000 for this work. Which of the following is true? Nadine has a preexisting duty to work on the basement and therefore cannot charge Forrest the extra $10,000. Nadine would only be able to collect the additional $10,000 if the contract was previously registered with the Office of the Secretary of State in the state where Forrest's house is located. Nadine is attempting to use undue influence to charge Forrest the additional $10,000. The mold was an unforeseen circumstance to the basement work, and it is lawful for Nadine to charge Forrest for the additional work.

The mold was an unforeseen circumstance to the basement work, and it is lawful for Nadine to charge Forrest for the additional work.

Sam takes photos at Callie's wedding. Sam thinks Callie owes him $1,000 for the wedding, while Callie think she owes Sam only $750. Callie sends Sam a check for $750. Which of the following is true? This is a liquidated debt. This is an unliquidated debt. Callie still owes Sam $250. The remaining $250 is secured debt.

This is an unliquidated debt.

Identify exceptions to the preexisting duty rule. (Check all that apply.) Unforeseen circumstances UCC Article 2 (sale of goods) Additional work required to fulfill the promised obligation Lack of resources to fulfill the promised obligation

Unforeseen circumstances UCC Article 2 (sale of goods) Additional work required to fulfill the promised obligation

Wanda works for Acme Corporation. Part of her job, for which she was hired 10 years ago, is to prepare a monthly report of all transactions in her department. After 10 years, Wanda tells Acme Corporation that she wants another $500 per month to prepare the reports. Which of the following is true? Wanda has an existing contractual duty to prepare the reports. An extra $500 per month is appropriate consideration. Wanda is using undue influence to gain a $500 per month benefit she is not entitled to receive. Acme Corporation must pay Wanda the extra $500 per month.

Wanda has an existing contractual duty to prepare the reports.

Consideration, as a required contractual element, can be: ______. (Check all that apply.) a service friendship a gratuity money

a service money

Ronaldo says to Becky "I would like to make you my full-time business law tutor." Becky responds that she will think about it and let him know after she talks to Barry who also asked her to be a business law tutor. This is an example of: a valid contract an illusory promise past consideration a preexisting duty detrimental reliance on Ronaldo's part

an illusory promise

Ronaldo says to Becky "I would like to make you my full-time business law tutor." Becky responds that she will think about it and let him know after she talks to Barry who also asked her to be a business law tutor. This is an example of: a valid contract an illusory promise past consideration a preexisting duty detrimental reliance on Ronaldo's part

an illusory promise

Without being asked, Johan washed his neighbor Bill's car every Saturday for a month. At the end of the month, Johan demanded payment of $100 from Bill for his services. Bill refused. If Johan sues for breach of contract, Johan will likely lose because there was no ______ exchange. equal perfunctory executory bargained-for

bargained-for

Under the Uniform Commercial Code (UCC), writing "paid in full" on a check for less than the full amount of the debt owed will not be an accord and satisfaction unless the creditor inadvertently cashes the check and waits longer than 90 days to offer the debtor repayment in the same amount, or unless the ______. check is sent to a special address for disputed amounts per the creditor's request check was sent to a credit card company words "paid in full" are written conspicuously with red ink and 14-point font debt was for medical services

check is sent to a special address for disputed amounts per the creditor's request

If there is no dispute that money is owed, the debt is ______. (Choose the BEST answer) liquidated secured unliquidated collateral

liquidated

For a(n) ______ debt, if the debtor offers to pay less money than is owed as full payment and the creditor agrees, there is not a(n)______, and even if the debtor pays the money agreed to, the creditor may nevertheless sue for the balance it believes is owed. liquidated; accord liquidated; satisfaction unliquidated; accord unliquidated; satisfaction

liquidated; accord

Performance of a duty you are obligated to do under the law is not good consideration. This is known as the ______ duty rule. collaborative conditional perfunctory preexisting

preexisting

If the parties disagree about the amount of money owed, the debt is ______. outstanding secured liquidated unliquidated

unliquidated