Chapter 10

In a unilateral contract the consideration for a promise is ______. A. Action B. A return promise C. An acknowledgement D. Consideration E. An agreement

A. Action

Which of the following consists of something of value given to another party in exchange for something else of value? A. Consideration B. Acknowledgement C. Approval D. Discharge E. Accession

A. Consideration

Under the ______ promises based on past consideration may be enforceable to the extent necessary to avoid injustice. A. Restatement (Second) of Contracts B. Uniform Commercial Code C. Restatement (Second) of Remedies D. Common law E. Civil law

A. Restatement (Second) of Contracts

When an accord and satisfaction is at issue, the ______ is the payment, by the debtor, of the reduced amount. A. Satisfaction B. Accord C. Both satisfaction and accord D. Fund transfer E. Bond

A. Satisfaction

Which of the following is true regarding a valid 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. C. When amounts agreed upon are paid, the debt is fully discharged except for any interest due. D. When amounts agreed upon are paid, the debt is fully discharged except for any late charges and any interest due. E. When amounts agreed upon are paid, the debt is fully discharged except for any late charges, interest due, or attorney fees of the creditor that are due.

A. When amounts agreed upon are paid, the debt is fully discharged.

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 when past consideration is at issue. D. Illusory promises qualify as consideration when promissory estoppel is at issue. E. Illusory promises are consideration only when a sale of goods is involved.

An illusory promise is not a consideration

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. Promissory estoppel.

Under Article ______ of the UCC, an agreement modifying a contract needs no consideration to be binding. A. One B. Two C. Three D. Five E. None of the above. There is no such rule in the UCC.

B. Two

Which of the following are examples of consideration? A. A benefit to the promisor only. B. A detriment to the promisee only. C. A promise to do something, a benefit to the promisor, or a detriment to the promisee. D. An accepted offer. E. A valid counteroffer.

C. A promise to do something, a benefit to the promisor, or a detriment to the promisee.

A[n] ______ contract is an agreement whereby the buyer agrees to purchase all his goods from one seller. A. Supply B. Use C. Requirement D. Output E. Arranged

C. Requirement

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. Liquidated

A[n] ______ contract is an agreement whereby the seller guarantees to sell everything she produces to one buyer. A. Supply B. Use C. Requirement D. Output E. Arranged

D. Output

Which of the following would not be considered an example of consideration? A. A promise to stay in a job until a particular project is completed. 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 stop drinking alcohol during exam week. E. A promise to pay your employees as required by law.

E. A promise to pay your employees as required by law.

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. Not valid consideration.

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. Unliquidated

CASE STUDY: Richard, who is cleaning out his garage, offers to sell Dawn a used computer for $200. Dawn replies that "I'll think about it and buy it if I decide to do so." Richard also calls Denise and offers to give Denise a used business law book. She is excited to receive the book and tells him that she will pick it up the next day. Richard also agrees to sell a communications book for $5 to Jill who promises to pick it up the next day. Meanwhile, Sam comes to visit, offers Richard $20 for the business law book; and Richard sells it to him. Sam also offers Richard $50 for the used computer. Richard sells it to Sam because he does not expect to hear from Dawn. Sam sees the communications book and offers Richard $30 for it. Richard decides to forget about Jill and proceeds to sell the book to Sam for $30. Denise is very angry because Richard did not save the book for her and claims that he breached a contract because she had accepted his offer. Jill is also angry because Richard sold the communications book and informs him that he breached the contract he had with her. Several days later, after any reasonable length of time for the offer to remain open had expired, Dawn tells Richard that she would like the computer. She tells him that her response constituted consideration in that it bound him to an option contract and that he should have awaited her response. Richard tells Sam that he needs to return everything for a full refund. Sam refuses

50. Which of the following best describes Dawn's statement that she would think about it and buy the computer if she decided to do so? A. It is an illusory promise. 51. Which of the following is true regarding Dawn's statement that her response was sufficient consideration in that it bound Richard to an option contract and that he should have awaited her response? E. She is incorrect on both counts. Her statement did not create an option contract nor was Richard bound to await her response. 52. Which of the following is true regarding Denise's claim that Richard breached a contract with her because Richard did not save the book for her after she had accepted his offer? E. Denise is incorrect because she did not provide any consideration. 53. Which of the following is true regarding Jill's claim that by selling the communications book for a higher price, Richard breached the contract he had with her? A. Jill is correct. B. Jill is correct only if she can establish that she had prior dealings with Richard. C. Jill is correct only if she can establish that she had provided past consideration in addition to the amount she agreed to pay for the book. D. Jill is incorrect because her acceptance was illusory. E. Jill is incorrect because the amount she agreed to pay was significantly less than the fair market value of the book and, therefore, did not amount to consideration. 54. Which of the following is true regarding the dispute between Richard and Sam regarding whether Sam must return anything? A. Sam must return the computer only. B. Sam must return the business law book only. C. Sam must return the communications book only. D. Sam must return the computer, the business law book, and the communications book. E. Sam does not legally have to return anything

CASE STUDY: Safe Bank was robbed of a significant sum of cash by Victor. Safe Bank offered a reward of $10,000 for anyone who captured or provided information leading to the capture of Victor. Ted, a police officer in town, promised Safe Bank officials that he would apprehend Victor. While on duty, Ted arrested Victor at a hamburger joint in town. He found Victor based upon a hunch he had after Ursula, who dated Victor, told him about various places Victor enjoyed eating. The bank refuses to pay either Ursula or Ted any of the reward money

55. Which of the following is true regarding the offer of the reward? A. It pertained to a bilateral contract that could be accepted only with consideration consisting of a promise. B. It pertained to a bilateral contract that could be accepted only with consideration consisting of performance. C. It pertained to a bilateral contract that could be accepted with consideration consisting of a promise performance. D. It pertained to a unilateral contract that could be accepted with consideration consisting of a promise. E. It pertained to a unilateral contract that could be accepted with consideration consisting of performance. 56. In a lawsuit between the bank and Ted regarding the reward funds, who is likely to prevail and why? A. The bank is likely to prevail because Ted only provided past consideration. B. The bank is likely to prevail because Ted had a preexisting duty to catch Victor. C. The bank is likely to prevail because Ted's promise to catch Victor was illusory. D. Ted is likely to prevail because his promise to catch Victor resulted in a binding bilateral contract. E. Ted is likely to prevail because an enforceable unilateral contract exists based on his performance. 57. In a lawsuit between the bank and Ursula regarding the reward funds, who is likely to prevail and why? A. The bank is likely to prevail because Ursula only provided past consideration. B. The bank is likely to prevail because Ursula was tainted by being Victor's girlfriend. C. The bank is likely to prevail because no valid bilateral contract existed. D. Ursula is likely to prevail because a valid bilateral contract existed. E. Ursula is likely to prevail because an enforceable unilateral contract exists based on her provision of information leading to the capture of Victor.

Which of the following is what a person will receive in return for performing a contractual obligation? A. Consideration B. Acknowledgement C. Approval D. Accord E. Accession

A. Consideration

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. "I'll take it if I decide to do so."

For a court to enforce a promise ______ must offer consideration. A. Only the offeror B. Only the offeree C. Only the acceptee D. Only the acceptor E. Both sides

E. Both sides

CASE STUDY: Toymaker CZY came out with a doll called the Cutie Doll. CZY initially had trouble selling the doll to retailers even after offering retailers a contract by which they could buy all the dolls they needed for $10. Slick Eddie, however, who had a retail toy store signed the agreement whereby he could buy all the dolls he needed for $10. Slick Eddie had a toy store but did very little business because he was so sleazy. Parents wanted to keep kids out. After a few months, Cutie Doll was a surprise hit, and every child wanted one. Slick Eddie, however, did not see much demand in his store because, regardless of whether he had Cutie Dolls, parents disliked him. When demand grew, CZY raised to $40 per doll the price charged to retailers who had not signed a contract to purchase all the dolls they needed for $10. Slick Eddie decided to purchase Cutie Dolls for $10 from CZY and then resell them for $35 to a retailer, Fun Days, who did not have a contract with CZY to purchase the dolls for $10. His contract with Fun Days required that he also gift wrap the dolls and that he would provide Fund Days with all the gift- wrapped dolls he could produce. Eddie then ordered 10,000 Cutie Dolls from CZY. When representatives of CZY figured out what was happening, sales of Cutie Dolls to Slick Eddie were stopped

58. What type of contract did Slick Eddie have with CZY? A. Requirement B. Output C. Dormant D. Both requirement and output E. Requirement, output, and dormant 59. What type of contract did Slick Eddie have with Fun Days? A. Requirement B. Output C. Dormant D. Both requirement and output E. Requirement, output, and dormant 60. Will CZY be required to honor Slick Eddie's order for 10,000 Cutie Dolls? A. Yes, because CZY should have known better than to enter into the contract with Slick Eddie. B. Yes, because it did not object to the contract with Slick Eddie within 5 days of the time it was entered into. C. Yes, because it did not object to the contract with Slick Eddie within 10 days of the time it was entered into. D. Yes, because it did not object to the contract with Slick Eddie within 30 days of the time it was entered into. E. Probably not because it appears that Slick Eddie failed to act in good faith.

Which of the following is true of an output contract under the UCC? A. It is valid so long as the output is made in good faith. B. It is valid so long as there is a writing setting forth the terms signed by the offeree. C. It is valid so long as there is a writing setting forth the terms signed by the offeror and the offeree. D. It is valid so long as more than nominal consideration is provided. E. It is not valid because of the lack of consideration.

A. It is valid so long as the output is made in good faith.

Which of the following is true of a requirement contract under the UCC? A. It is valid so long as the requirement is made in good faith. B. It is valid so long as there is a writing setting forth the terms signed by the offeree. C. It is valid so long as there is a writing setting forth the terms signed by the offeror and the offeree. D. It is valid so long as more than nominal consideration is provided. E. It is not valid because of the lack of consideration.

A. It is valid so long as the requirement is made in good faith.

Sam, who has a retail clothing store, orders 50 white shirts from XYZ manufacturer. He later calls a representative of XYZ and requests that blue shirts be sent instead. The representative agrees. Sam gets white shirts and complains. The XYZ representative says there was no consideration for the contract. Which of the following is the correct resolution of the dispute? A. Sam is correct because under the UCC no additional consideration was needed. B. Sam is correct because a valid unilateral contract existed. C. The XYZ representative is correct because no additional consideration was provided. D. The XYZ representative is correct because no valid bilateral contract existed. E. The XYZ representative is correct both because no additional consideration was provided and because no valid bilateral contract existed

A. Sam is correct because under the UCC no additional consideration was needed.

In the case of Smith v. Riley, referenced in the text, what did the court rule in regard to whether a purchase in the amount of "the sum of One Dollar ($1.00) and other and good and valuable consideration" was sufficient consideration to support an agreement? A. The Court ruled that the purchase amount was sufficient consideration. B. The Court ruled that the purchase amount was insufficient consideration only because the sale of an interest in a lease was involved. C. The Court ruled that the purchase amount was insufficient consideration only because a sale of goods was involved. D. The Court ruled that the purchase amount was insufficient consideration only because a domestic partnership was involved. E. The Court ruled that the purchase amount was insufficient consideration because over $50,000 was at issue.

A. The Court ruled that the purchase amount was sufficient consideration.

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 her hair looking as good as possible. E. Sally will win because there was no valid consideration in exchange for the highlighting.

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.

Which of the following represents a valid accord and satisfaction? A. When a dispute over an unliquidated debt is settled and paid for less than the full amount. B. When a dispute over a liquidated debt is settled and paid for less than the full amount. C. When a dispute over an unliquidated debt is settled and paid for the full amount. D. When a dispute over a liquidated debt is settled and paid for the full amount. E. When a dispute over either an unliquidated or liquidated debt is settled and paid for less than the full amount.

A. When a dispute over an unliquidated debt is settled and paid for less than the full amount.

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. Both satisfaction and accord D. Written compromise E. Written acknowledgement

B. Accord

Which of the following occurs when one party makes a promise knowing the other party will rely on it, the other party does rely on it, and 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. Promissory estoppel.

Yolanda agrees to bathe and groom Wendy's dog, Fluffy, for $20. Yolanda agreed to the price before seeing Fluffy who is actually a very heavy dog with lots of hair. Yolanda tells Wendy that if she is going to groom Fluffy, the price will be $30. Wendy agrees. Yolanda bathes and grooms Fluffy, but Wendy will only pay $20. 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 is inapplicable, Yolanda is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy for $20. D. Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because Wendy's promise to pay $30 was illusory. E. Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because past consideration was involved

C. Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy for $20.

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. 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.

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 return promise

Which of the following is true regarding whether an accepted offer to satisfy a debt by paying only part 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 only if a liquidated or unliquidated debt is involved.

D. Partial payment is consideration if an unliquidated debt is involved.

The preexisting duty rule consists of which of the following? A. Only that performance of a duty one is obligated to do under the law is not good consideration. B. Only that performance of an existing contractual duty is not good consideration. C. Only that a bilateral contract is not binding without past consideration. D. That performance of a duty one is obligated to do under the law is not good consideration and that performance of an existing contractual duty is not good consideration. E. That performance of an existing contractual duty is not good consideration and that a bilateral contract is not binding without past consideration

D. That performance of a duty one is obligated to do under the law is not good consideration and that performance of an existing contractual duty is not good consideration.

Which of the following are exceptions to the preexisting-duty rule? A. Unforeseen circumstances only. B. Additional work only. C. Past consideration only. D. Unforeseen circumstances and additional work, but not past consideration. E. Unforeseen circumstances, additional work, and past consideration.

D. Unforeseen circumstances and additional work, but not past consideration.

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 an item was sold for a low sum in order to avoid claims of creditors.

E. Courts seldom consider the adequacy of consideration but will do so if an item was sold for a low sum in order to avoid claims of creditors.

Which of the following is true of a requirements contract under common law? A. It is valid so long as there is a writing setting forth the terms signed by the offeror. B. It is valid so long as there is a writing setting forth the terms signed by the offeree. C. It is valid so long as there is a writing setting forth the terms signed by the offeror and the offeree. D. It is valid so long as more than nominal consideration is provided. E. It is not valid because of the lack of consideration

E. It is not valid because of the lack of consideration

Which of the following is true of an output contract under common law? A. It is valid so long as there is a writing setting forth the terms signed by the offeror. B. It is valid so long as there is a writing setting forth the terms signed by the offeree. C. It is valid so long as there is a writing setting forth the terms signed by the offeror and the offeree. D. It is valid so long as more than nominal consideration is provided. E. It is not valid because of the lack of consideration.

E. It is not valid because of the lack of consideration.

Mary has a pet shop and verbally orders 50 packages of dog food for puppies from a supplier for a total cost of $1,000. Later she calls the supplier and changes the order to food for adult dogs. When 50 packages of puppy food arrive, Mary complains. The supplier tells her that the modification was not valid because nothing was put in writing. Which of the following is the correct resolution of the dispute? A. The supplier is correct because modification of orders of over $200 must be in writing. B. The supplier is correct because modification of orders of over $500 must be in writing. C. The supplier is correct because modification of orders of over $600 must be in writing. D. The supplier is correct because modification of orders of over $800 must be in writing. E. Mary is correct because under the circumstances, there was no requirement of a writing to modify the agreement

E. Mary is correct because under the circumstances, there was no requirement of a writing to modify the agreement

What did the court in the case in the text, Labriola v. Pollard Group, Inc., rule regarding whether the noncompete agreement at issue in the case was enforceable? A. The court ruled that the noncompete agreement was enforceable because the employee received independent consideration for it in the form of increased wages. B. The court ruled that the noncompete agreement was enforceable because the employee received independent consideration for it in the form of a fixed term of employment. C. The court ruled that the noncompete agreement was enforceable because the employee received independent consideration for it in the form of a promotion. D. The court ruled that the noncompete agreement was unenforceable because the employee did not have sufficient education to understand it. E. The court ruled that the noncompete agreement was not enforceable because of a lack of consideration.

E. The court ruled that the noncompete agreement was not enforceable because of a lack of consideration.