Chapter 12 Assessment

__________ estoppel can be applied in the case of the absence of a binding consideration. Legal Justified Equitable Promissory

Promissory

Which of the following terms in an agreement would not render it illusory? A right to cancel a contract after the first 30 days. A promise to perform under the contract "if I feel like it." A promisee promises to buy "all the tools I want." A party to an agreement has a right to cancel or terminate at any time, for any reason, and without any notice.

A right to cancel a contract after the first 30 days.

Able borrowed $10,000 from Baker, promising to return it with $1,000 interest on January 1, 2016. There is no dispute that Able owes Baker $11,000 due on January 1, 2016. On that day, Able gave Baker a valid check in the amount of $10,500 marked "payment in full for loan due January 1, 2016." Baker accepted that check and deposited it into his account. If Baker then sues Able for the unpaid $500, what would the result be? Able wins, because Baker accepted the lesser payment. Able wins, because Baker made an implied promise to accept $10,500 as full payment, thereby forgiving $500 of the loan. Baker wins, because Able gave no consideration in exchange for Baker's promise to forgive $500 of the loan. Baker wins, because marking "payment in full" can never relieve a party of its original obligations under a contract.

Baker wins, because Able gave no consideration in exchange for Baker's promise to forgive $500 of the loan.

Which of the following is an exception to a consideration requirement? Nominal consideration Adequacy of consideration Bargained-for exchange Charitable subscription

Charitable subscription

__________ is what distinguishes enforceable agreements from gratuitous promises. Collaboration Consideration Subjectivity Adjudication

Consideration

John promised the other co-owners of the ship Sea Fairy that he would insure the ship for an upcoming voyage. However, John fails to insure the ship. The ship is shipwrecked in a turbulent sea. The co-owners sue John for breach of contract. Will they succeed? No, because it was a purely gratuitous promise. Yes, because there was a valid and binding contract between the co-owners. No, because an intervening cause absolved John's liability. Yes, because of promissory estoppel.

No, because it was a purely gratuitous promise.

Joe promises to give his brother Bill a $30,000 new car for $50. Which of the following best describes the $50? Adequate consideration Nominal consideration Past consideration Requirements contract

Nominal consideration

Mr. Green is a local mobster who makes Mr. Blue pay $100 not to have his business burned to the ground. What is the status of the contract between Mr. Green and Mr. Blue? There is a contract as long as $100 is a reasonable profit for not burning down the business There is a contract as long as a court reviews the terms within 30 days There is a contract as long as Mr. Green registers the contract with the Secretary of State There is no contract because Mr. Green gave inadequate consideration

There is no contract because Mr. Green gave inadequate consideration

Fitz owes Express Men's Clothing Store Credit Company $10,000. Express decides to settle out the debt when Fitz is unable to pay for many months. Express accepts $7,000 in final settlement of the debt. In which of the following circumstances is a debt settlement a binding contract? Where the settlement is part of a composition agreement Where the amount of the debt is certain and undisputed Where the amount of the debt is uncertain or subject to dispute Where the only consideration the creditor gives the debtor is his promise not to sue the debtor on the original debt

Where the amount of the debt is certain and undisputed

Ron was employed by Mass Company in 1990. At that time, he was given an employee handbook that described the particular steps that had to be taken before an employee could be fired. Later, in 2019, Mass published a new handbook by which all workers' statuses were changed to at-will employees. Mass then fired Ron. Ron claimed he was terminated without cause and was not afforded procedures described in the 1990 handbook, such as an appeal or review of the decision. He sued Mass under breach of contract based upon the 1990 employee handbook. Will he succeed? Yes, because the modifications in 2019 were not by mutual consent and for consideration. No, because the employee handbook contains terms and conditions of the employment contract. No, because Ron had acquiesced to the modification by not raising any objection. Yes, because Mass Company has arbitrarily terminated Ron.

Yes, because the modifications in 2019 were not by mutual consent and for consideration.

James owns Great Expectations, a trendy restaurant in Manhattan. He enters into a contract with Mary, who makes and sells pastries. The contract states that Mary will "supply all of Great Expectation's needs" for pastries for the next year. Is this contract enforceable? No, because James might not need any pastries in the next year. Yes, because this is a requirements contract. Yes, but only if James buys all of the pastries produced by Mary in the next year. No, because the promise fails to specify the quantity of goods to be purchased.

Yes, because this is a requirements contract.

Jamie has borrowed money and made advances to Julie's Tacos for over 5 years. Jamie would like to collect on the money owed but is unsure of the exact amount. Jamie and Julie decide on $10,000 in full and final settlement of any monies owed. The settlement of an unliquidated debt is called a(n): accord and satisfaction. moral obligation. forbearance to sue. past consideration.

accord and satisfaction.

Joe agrees to paint four of Farmer's silos for $400 a silo. Joe begins painting the silos. Consideration can be a(n) __________ in the case of a unilateral contract. act guarantee promise security

act

When former Supreme Court Justice Oliver Wendell Holmes said, "It is the essence of a consideration that, by the terms of the agreement, it is given and accepted as the motive or inducement of the promise," he was referring to: nominal consideration. bargained-for exchange. past consideration. moral obligations.

bargained-for exchange.

X and Y have a contract, which obligated X to sell Y 100 boxes of screws for $100. The parties orally modify the contract so that X will sell Y the same 100 boxes of screws for $125. The second agreement is: binding by virtue of being mutually agreed on. not binding due to the promise of performing a preexisting legal obligation. not binding because it is an outputs contract. binding because it is due to unforeseeable situation.

binding by virtue of being mutually agreed on.

David, a debtor, owes debts to creditors Paul, Mark, and Gary. Paul, Mark, and Gary agree with each other and with David to release him from his debts, in exchange for his promise to pay Paul, Mark, and Gary 75 percent of the amount he owes each of them. This is called a(n) __________ agreement, and such agreements generally are binding contracts. composition moral endeavor novated

composition

In the case in the text, Mid-American Salt, LLC v. Morris County Cooperative Pricing Council, 964 F.3d 218 (3d Cir. 2020), the court held that the agreement was: terminated. voidable. enforceable. illusory.

illusory.

Once a bankrupt debtor __________, creditors no longer have the legal right to collect discharged debts. files his bankruptcy petition is appointed a trustee is granted a discharge notifies his creditors of his pending bankruptcy

is granted a discharge

The general common law rule on contract modifications holds that an agreement to modify an existing contract requires a(n): inclusion of a new party to the contract. economic exchange of substantial value. necessary increase in the value of the exchange. new and independent consideration.

new and independent consideration.

If no other consideration is actually exchanged, this is called __________ consideration. adequate nominal delayed inadequate

nominal

A contract in which one party to the agreement agrees to buy all of the other party's production of a particular commodity is called a(n) __________ contract. input output requirements specific

output

Maddie agrees to buy all black and blonde hair wigs that Julie is able to produce for the Fall salon training season. Contracts in which one party to the agreement agrees to buy all of the other party's production of a particular commodity is called a(n): output contract. nominal consideration. requirements contract. composition agreement.

output contract.

Consideration can be a(n) __________ in the case of a bilateral contract. act exchange promise gift

promise

A reaffirmation promise has to be made prior to the date of the discharge and gives the debtor the right to revoke his promise within 30 days after it becomes enforceable. This is the requirement of: promises to pay debts barred by statutes of limitations. charitable subscriptions. promises to pay debts barred by bankruptcy discharge. promissory estoppels.

promises to pay debts barred by bankruptcy discharge.

An agreement in which a party promises to supply all the other party's needs for a particular commodity is called a(n): composition agreement. output contract. requirements contract. nominal consideration.

requirements contract.