ACCT 2700 Quiz #13

A promise made in return for an act or event that has already taken place is fully enforceable. (T/F)

False.

If a party is already bound by contract to perform a certain duty, that duty can serve as consideration for a second contract. (T/F)

False.

In general, courts question the adequacy of consideration. (T/F)

False.

Gwen is indebted to Home Loan Company for $75,000. Gwen agrees to pay, and Home Loan agrees to accept, a lesser amount than the lender originally claimed was owed. The performance of this agreement is A. a satisfaction. B. a release. C. an illusory promise. D. an accord.

A. a satisfaction.

Maria is the sheriff of Narez, Texas. Oscar robs a Narez gas station and a $500 reward is offered for his capture. When, later, Maria finds and arrests him, with respect to the reward, she can A. not collect it because she had a preexisting duty to capture Oscar. B. collect it. C. not collect it because it is not legally sufficient consideration. D. not collect it because it is an illusory promise.

A. not collect it because she had a preexisting duty to capture Oscar.

While sailboarding, Jolie is injured when Kirby carelessly crosses her path. Kirby's insurance company offers Jolie $50,000 to release Kirby from liability, and she accepts. Later, she learns that her injuries are more serious than she realized. The release is A. unenforceable because Kirby has a preexisting duty to pay. B. enforceable. C. unenforceable because Jolie's injuries are unforeseeably difficult. D. unenforceable because the release is an illusory promise.

B. enforceable.

Dore's Aunt Em tells her, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." Em's promise is A. enforceable. B. illusory. C. a preexisting duty. D. a forbearance.

B. illusory.

Jen promises to pay Kam $500 because "she does not have as much money as other people." Jen's promise is A. enforceable because society wants people to keep their promises. B. not enforceable because Kam has not given consideration in return. C. enforceable because the redistribution of wealth is a valid social goal. D. not enforceable because Jen could have paid Kam more.

B. not enforceable because Kam has not given consideration in return.

Si promises to pay his personal assistant Tery $50,000 in consideration of the services she provided over the years. Si never makes the payment. Si's promise is A. not enforceable because the failure to pay is an unforeseen difficulty. B. not enforceable because the consideration is in the past. C. enforceable to the extent of what Tery's services were actually worth. D. enforceable for the entire $50,000.

B. not enforceable because the consideration is in the past.

Fritz offers to buy a guitar owned by Holle for twice what she paid for it. She accepts and hands the guitar to Fritz. Holle's delivery of the guitar is A. not consideration because the value is not legally sufficient. B. not consideration because its adequacy is unfair. C. consideration. D. not consideration because the exchange is not a bargain.

C. consideration.

A fire threatens to engulf a commercial building in Middletown. The building's owner promises a cash reward to the Middletown Fire Department to extinguish the blaze. The firefighters cannot claim the reward because A. the promise of a cash reward is illusory. B. extinguishing the fire represents past consideration. C. extinguishing the fire is the firefighters' preexisting duty. D. extinguishing the fire is a foreseen difficulty.

C. extinguishing the fire is the firefighters' preexisting duty.

Sol offers Tiff $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely A. enforce the deal after questioning the adequacy of consideration. B. set aside the deal after questioning the adequacy of consideration. C. not question the adequacy of the consideration. D. rewrite the deal after questioning the adequacy of consideration.

C. not question the adequacy of the consideration.

Onsite Restoration Inc. begins renovating houses for Property Company under a contract for a stated amount per house. After six months, Onsite demands an extra $20,000 per house, stating no reason for the extra $20,000, but asserting that it will stop work if it is not paid. The agreement is A. unenforceable as an illusory promise. B. enforceable as the consideration is past. C. unenforceable due to the preexisting duty rule. D. enforceable due to unforeseen difficulties.

C. unenforceable due to the preexisting duty rule.

A preexisting duty may arise out of a previous contract. (T/F)

True.

A promise is illusory when its performance depends solely on the discretion of the promisor. (T/F)

True.

Forfeiting a right to sue to recover further damages can constitute consideration. (T/F)

True.

Providing accounting services is "something of legally sufficient value." (T/F)

True.

Situations in which agreements lack consideration include those involving a preexisting duty. (T/F)

True.

To be legally sufficient, consideration must be something of value in the eyes of the law. (T/F)

True.

To enforce a contractual promise, there must be an exchange of consideration underlying the bargain. (T/F)

True.