Chapter 8 HW Quiz

Mike borrowed $10,000 from his friend Johnson to purchase a motorcycle and promised to pay Johnson back the entire amount within three months. Six months later, Mike tells Johnson he is low on funds, but promises to pay Johnson $5000 if Johnson will agree to cancel the balance of the debt. Is Mike's promise to pay $5000 valid consideration to support canceling the balance of his debt?

b. No, because Johnson is already entitled to repayment of the $5000.

Which of the following best describes the term "consideration"?​

c. ​It indicates what the promisor demands and receives as the price for a promise.

Mark owes $2000 each to his business partners, Ryan, Bryan, and Clark. Since Mark is facing financial difficulties, his business partners agree to accept a total amount of $4800 from Mark as a cancellation of the unpaid balance due to them. This type of an agreement is known as a _____.

d. composition of creditors

When one refrains or promises to refrain from doing something, this conduct is called:

forebearance