Business Law Chapter 10

20. 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

8. 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

13. 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

1. Consideration is optional in every contract. True False

false

4. Past consideration as a rule qualifies as consideration. True False

false

2. An exception to the rule requiring consideration is promissory estoppel. True False

true

3. An illusory promise is not consideration. True False

true

6. Partial payment of a debt may or may not be valid consideration, depending on whether the debt is liquidated or unliquidated. True False

true

5. In some cases if past consideration was given with expectation of future payment, the court may enforce the promise. True False

ture

24. 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

10. 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.

9. 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

12. 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.

A. Illusory promises are not consideration.

22. 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.

14. 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

18. 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.

11. 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.

17. 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

7. 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.

15. 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.

21. 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

23. 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.

16. 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.

19. 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.