business law test bank 15
An exception to the rule requiring consideration is promissory estoppel. True False
TRUE
An illusory promise is not a consideration True False
TRUE
In some cases, if past consideration was given with expectation of future payment, the court may enforce the promise True False
TRUE
Partial payment of a debt may or may not be valid consideration, depending on whether the debt is liquidated or unliquidated. True False
TRUE
Which of the following was the judge's ruling in Jamil Blackmon v. Allen Iverson, the case in the text in which the plaintiff alleged that the defendant, a professional athlete, wrongfully failed to pay him a percentage of proceeds received from using the nickname "The Answer" in merchandising although the defendant agreed to do so after the plaintiff suggested the use of the nickname? A. That consideration was lacking because the defendant was not bound to use the nickname. B. That the defendant's promise to pay was past consideration insufficient to create a binding contract. C. That consideration was present and that the defendant was liable to the plaintiff. D. That the issue of consideration was irrelevant because consideration was not required in this type of contract. E. That the defendant was required to pay the plaintiff only half of the percentage initially offered because a gift situation was involved.
b
In a bilateral contract, the consideration for each promise is ____. A. A completed act B. The beginning of action in acceptance, even if it is not complete C. An acknowledgement D. A return promise E. An agreement
d
A promise to do something that you are already obligated to do is ____. A. Valid consideration because it is illusory consideration B. Valid consideration only in the employment context C. Valid consideration because it is past consideration D. Valid consideration only if a sale of goods is involved E. Not valid consideration
e
Consideration is optional in every contract. True False
FALSE
When an accord and satisfaction is at issue, the ______ is the payment, by the debtor, of the reduced amount. A. Satisfaction B. Accord C. Seal D. Written compromise E. Written acknowledgement
a
Which of the following is not an example of consideration? A. A promise to stay in a job until a particular project is complete. B. A promise to your football coach to refrain from riding your motorcycle during football season even though you love riding it. C. A promise to cook dinner for your roommate for the next six months. D. A promise to buy skis for $300 if you like them. E. A promise to stop staying out late at night during exam week.
d
A liquidated debt may be the subject of an accord and satisfaction True False
FALSE
A promise to do something that you are already obligated to do is generally a valid consideration. True False
FALSE
As a general rule, past consideration qualifies as consideration. True False
FALSE
One consideration in determining whether consideration is sufficient to support a contract for the sale of goods under the UCC is whether both parties received a good deal under UCC rules and principles. True False
FALSE
in a bilateral contract, the consideration for a promise is a completed act. True False
FALSE
In a unilateral contract, the consideration for a promise is a[n] ____. A. Action B. Return promise C. Acknowledgement D. Consideration E. Agreement
a
Sally goes to have her hair trimmed and agrees to pay $40 to the stylist. While there, Sally decides that she would also like highlights. The stylist informs her that highlights will cost an additional $30. Sally agrees to the price, gets the highlights, but refuses to pay the extra amount. What is the likely result in a dispute between Sally and the stylist and why? A. The stylist will win because she did additional work in exchange for the extra payment; and, therefore, Sally's promise was supported by valid consideration. B. The stylist will win because she did additional work in exchange for the extra payment; and, therefore, a valid unilateral contract existed. C. The stylist will win unless Sally can show that she had previously received both a trim and highlights for $40. If she can prove that she previously received both for $40, then the past expectations rule applies. D. Sally will win because the stylist had a preexisting duty to have Sally's hair look as good as possible. E. Sally will win because there was no valid consideration in exchange for the highlighting.
a
Sam promises his uncle, Bob, that he will lose 10 pounds and exercise every day during the spring semester in exchange for having his tuition paid for the fall semester. The uncle agrees; but after Sam has lost 10 pounds and exercised all semester, Bob refuses to pay saying that no contract existed. Which of the following is true? A. Consideration was present, there was an enforceable contract, and Bob has wrongfully refused to pay. B. There was no consideration present, and Bob has no obligation to pay. C. There was no consideration present, but Bob must pay under principles of promissory estoppels. D. There was consideration present, but Bob is not required to pay because the contract was illusory. E. There was consideration present, but Bob is not required to pay because Bob did not receive a benefit personally.
a
Sue is three months behind on her mortgage, and her lender filed negative information affecting her credit rating. Sue mailed one monthly payment to the lender along with a letter providing that she was making the payment on condition that the lender removes negative material sent to credit reporting agencies affecting her credit rating. The lender cashed the check but did not remove the negative information. Sue sues the bank for breach of contract. Which of the following is the most likely result? A. The bank will win because under the preexisting duty rule, Sue was already legally obligated to make the payment, and there was no consideration to support the contract. B. The bank will win because under federal law, once correct negative information is reported regarding a customer, it can be removed only if it is found to be untruthful. C. The bank will win because under state law, once correct negative information is reported regarding a customer, it can be removed only if it is found to be untruthful. D. Sue will win because the bank's cashing the check constituted acceptance of her offer, and a valid contract existed. E. Sue will win because the bank had an obligation to notify her that it was not accepting her offer before cashing the check.
a
Which of the following is true regarding an accord and satisfaction? A. When amounts agreed upon are paid, the debt is fully discharged. B. When amounts agreed upon are paid, the debt is fully discharged except for any late charges due on the initial indebtedness. C. When amounts agreed upon are paid, the debt is fully discharged except for any interest due on the initial indebtedness. D. When amounts agreed upon are paid, the debt is fully discharged except for any late charges and for any interest due on the initial indebtedness. E. When amounts agreed upon are paid, the debt is fully discharged except for any late charges or interest due on the initial indebtedness, or attorney fees of the creditor that are due.
a
Which of the following is true regarding illusory promises? A. Illusory promises are not consideration. B. Illusory promises are consideration. C. Illusory promises qualify as consideration only when past consideration is at issue. D. Illusory promises qualify as consideration only when promissory estoppel is at issue. E. Illusory promises are consideration only when a sale of goods is involved.
a
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. A liquidated debt is involved, and there is an accord and satisfaction. B. A liquidated debt is involved, and there is an accord but no satisfaction. C. A liquidated debt is involved, and there is not a satisfaction or an accord. D. An unliquidated debt is involved, and there is an accord and satisfaction. E. An unliquidated debt is involved, and there is an accord but not satisfaction.
a
Which of the following is true regarding the rating the World Bank gives China in relation to the ease of doing business there? A. China is rated in the top 10. B. China is ranked near the middle. C. China is ranked in the bottom 25. D. China is ranked in the bottom 10. E. China is ranked last.
a
Which of the following is what a person will receive in return for performing a contract obligation? A. Consideration B. Acknowledgement C. Approval D. Accord E. Accession
a
Christen graduates from college, receives a job offer across the country, and moves there giving up her apartment and cancelling all the other job interviews. After she gets there, she is told that there is no job. What may she recover in most states? A. Nothing B. Reliance damages C. Liquidated damages D. Acknowledged damages E. Approved damages
b
In return for his oral promise to pay her $100, Penny promises her uncle that she will not violate laws against speeding for one year. Penny abides by her promise, but her uncle refuses to pay. Which of the following is true regarding whether Penny is entitled to the money? A. Penny is entitled to the money because she upheld her part of the bargain. B. Penny is not entitled to recover because she had a preexisting duty to obey laws against speeding. C. Penny is not entitled to recover because obeying traffic laws was actually good for her, not something that would constitute a detriment. D. Penny is not entitled to recover unless the agreement was put under seal. E. Penny is entitled to recover, but only ½ of the amount, because a family member is involved and the agreement was not in writing.
b
Sam offers Betty his bicycle for $75. Which of the following is an example of an illusory promise on the part of Betty? A. "I'll take it." B. "I'll take it if I decide to do so." C. "I won't pay $75, but I will pay $50." D. "I'll take it if you will let me try it out first and the brakes work well." E. "I'll take it if you will buy new tires."
b
When an accord and satisfaction is at issue, the ______ is the new agreement to pay less than the creditor claims is owed. A. Satisfaction B. Accord C. Seal D. Compromise E. Acknowledgement
b
Which of the following is an exception to the rule requiring consideration? A. Promissory agreement B. Promissory estoppel C. Quasi estoppel D. Quasi agreement E. Promissory performance
b
Which of the following occurs when three conditions are met: one party makes a promise knowing the other party will rely on it; the other party does rely on it; the only way to avoid injustice is to enforce the promise? A. Promissory agreement B. Promissory estoppel C. Quasi estoppel D. Quasi agreement E. Promissory performance
b
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 after they broke up to enforce two agreements regarding the sale and assignment of property to her? A. 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. B. 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. C. 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. D. 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. E. The court ordered the parties to divide on a 50/50 basis the assets in question based on their domestic partnership.
b
As discussed in the case of Double AA Builders Ltd., v. Grand State Construction L.L.C., which of the following may be used to necessitate that a subcontractor perform according to the terms of its bid because the contractor has relied on the subcontractor's bid? A. Consideration B. Primary consideration C. Promissory estoppel D. Reality estoppel E. Secondary consideration
c
Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is no dispute over the amount or existence of the debt, and the creditor agrees? A. A liquidated debt is involved, and there is an accord and satisfaction. B. A liquidated debt is involved, and there is an accord but no satisfaction. C. A liquidated debt is involved, and there is neither a satisfaction nor an accord. D. An unliquidated debt is involved, and there is an accord and satisfaction. E. An unliquidated debt is involved, and there is an accord but not satisfaction.
c
Tina, an experienced pool contractor, and Bruce agree on a price for Tina to build a pool in Bruce's backyard. While the area is not known for rocks, unfortunately Tina unexpectedly encounters a significant problem with solid rock in the backyard when she starts to dig. She tells Bruce that unless she receives an extra $5,000, she cannot complete the job. Bruce agrees thinking to himself that he has a way out. When Tina finishes the pool, Bruce refuses to pay the additional $5,000. Which of the following is the most likely result of their dispute? A. Bruce will be required to pay because a typical, unilateral contract is involved, and he got the benefit of his bargain. B. Bruce will be required to pay because a typical, bilateral contract is involved, and he got the benefit of his bargain. C. Bruce will be required to pay because unforeseen circumstances are an exception to the preexisting duty rule. D. Bruce will not be required to pay because he provided no additional consideration, and the preexisting duty rule applies. E. Bruce will only be required to pay ½ of the agreed upon amounts because of the calculations involved under the preexisting duty rule.
c
Which of the following is true under the UCC regarding checks marked "paid-in-full"? A. 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 and avoid an accord and satisfaction. B. 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 and avoid an accord and satisfaction. C. 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 and avoid an accord and satisfaction. D. 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 and avoid an accord and satisfaction. E. The business has no recourse, and the debt is deemed discharged and satisfied.
c
Yolanda agrees to bathe and groom Wendy's dog, Fluffy Puff, for $30. Yolanda agreed to the price before seeing Fluffy Puff who is a chubby dog with lots of hair. Yolanda tells Wendy that if she is going to groom Fluffy Puff, the price will be $40. Wendy reluctantly agrees but tells Yolanda that she should not have been surprised that a dog named Fluffy Puff would have lots of hair. Yolanda bathes and grooms Fluffy Puff, but Wendy will only pay $30. Which of the following is correct regarding Yolanda's entitlement to the extra $10? A. Yolanda is entitled to the extra $10 because a valid bilateral contract existed. B. Yolanda is entitled to the extra $10 because a valid unilateral contract existed. C. Assuming the unforeseen circumstances rule does not apply, Yolanda is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy Puff for $30. D. Assuming the unforeseen circumstances rule does not apply, Yolanda is not entitled to the extra $10 because Wendy's promise to pay $30 was illusory. E. Assuming the unforeseen circumstances rule does not apply, Yolanda is not entitled to the extra $10 because past consideration was involved.
c
Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is a dispute over the amount of the debt, and the creditor agrees? A. A liquidated debt is involved, and there is an accord and satisfaction. B. A liquidated debt is involved, and there is an accord but no satisfaction. C. A liquidated debt is involved, and there is neither a satisfaction nor an accord. D. An unliquidated debt is involved, and there is an accord and satisfaction. E. An unliquidated debt is involved, and there is an accord but not satisfaction.
d
In a[n] ______ debt, there is no dispute about the fact that money is owed and the amount of money owed. A. Actual B. Acknowledged C. Certain D. Liquidated E. Unliquidated
d
Tina, an experienced pool contractor, and Bruce agree on a price for Tina to build a pool in Bruce's backyard. Tina discovers that she did not initially figure in enough of a charge for labor. She tells Bruce that unless she receives an extra $5,000 with which to hire workers, she cannot complete the job. Bruce agrees thinking to himself that he has a way out. When Tina finishes the pool, Bruce refuses to pay the additional $5,000. Which of the following is the most likely result of their dispute? A. Bruce will be required to pay because a typical, unilateral contract is involved, and he got the benefit of his bargain. B. Bruce will be required to pay because a typical, bilateral contract is involved, and he got the benefit of his bargain. C. Bruce will be required to pay because unforeseen circumstances are an exception to the preexisting duty rule. D. Bruce will not be required to pay because he provided no additional consideration, and the preexisting duty rule applies. E. Bruce will only be required to pay ½ of the agreed upon amounts because of the calculations involved under the preexisting duty rule.
d
Which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt when the debt itself, in its entirety, is in dispute, and the creditor agrees? A. A liquidated debt is involved, and there is an accord and satisfaction. B. A liquidated debt is involved, and there is an accord but no satisfaction. C. A liquidated debt is involved, and there is neither a satisfaction nor an accord. D. An unliquidated debt is involved, and there is an accord and satisfaction. E. An unliquidated debt is involved, and there is an accord but not satisfaction.
d
Which of the following is true regarding the preexisting duty rule? A. Unforeseen circumstances is an exception, but additional work and past consideration are not exceptions. B. Additional work is an exception, but unforeseen circumstances and past consideration are not exceptions. C. Past consideration is an exception, but unforeseen circumstances and additional work are not exceptions. D. Unforeseen circumstances and additional work are exceptions, but past consideration is not an exception. E. Unforeseen circumstances and past consideration are exceptions, but additional work is not an exception.
d
Which of the following is true regarding whether an accepted offer to pay part of a debt is consideration? A. Partial payment is consideration under all circumstances. B. Partial payment is not consideration under any circumstances. C. Partial payment is consideration if a liquidated debt is involved. D. Partial payment is consideration if an unliquidated debt is involved. E. Partial payment is consideration if an exception applies to the general rule that partial payment is not consideration for an unliquidated debt.
d
Which of the following was involved when the government, in attempting to help AIG, agreed with AIG to lend AIG up to $85 billion in exchange for nearly 80 percent of AIG's stock? A. An accord and satisfaction B. An accord but not a satisfaction C. A unilateral contract D. A bilateral contract E. An unliquidated contract
d
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? A. That because refraining from the conduct at issue benefited his character and health, the nephew could not recover. B. That no consideration was involved, and the nephew could not recover because the consideration from him did not consist of money or goods. C. 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. D. That the nephew could recover because he supplied consideration. E. That the nephew could recover, but only under promissory estoppel an amount compensating him for his reliance on the promise.
d
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 3 percent of the company's stock? A. That the promise to transfer the stock flowed from the loan transaction and was enforceable by the plaintiff. B. That the promise was unenforceable because lawyers may not loan clients money. C. That the promise was enforceable only if the total the plaintiff received in funds did not violate state usury laws involving maximum interest rates. D. That the promise was not enforceable because it was a gift. E. That the promise was enforceable as a gift.
d
For a court to enforce a promise, ______ must offer consideration. A. The offeror but not the offeree B. The offeree but not the offeror C. The acceptee but not the acceptor D. The acceptor but not the acceptee E. Each side to the contract
e
In a[n] ______ debt, the parties either dispute the fact that any money is owed or agree that some money is owed but dispute the amount. A. Disputed B. Unacknowledged C. Uncertain D. Liquidated E. Unliquidated
e
Which of the following is true regarding the adequacy of consideration? A. Courts generally consider the adequacy of consideration in determining whether to enforce a contract. B. Courts consider the adequacy of consideration only if something is sold for less than 90% of its market value. C. Courts consider the adequacy of consideration only if something is sold for less than 80% of its market value. D. Courts consider the adequacy of consideration only if something is sold for less than 70% of its market value. E. Courts seldom consider the adequacy of consideration but will do so if fraud is involved.
e
Which of the following would not be considered an example of consideration? A. A promise to be on time for class all semester. B. A promise to stop drinking sports drinks. C. A promise to walk the neighbor's dog. D. A promise to call the police if the neighbor's alarm system should go off while they are on vacation. E. A promise to pay your employees as required by law.
e