CH 11

If Sam, a high school senior, promises to go to school every day in exchange for an "A" in his history class, his promise will most likely: a. Be considered illusory. b. Be found to lack consideration as he had a preexisting duty to attend school. c. Be considered de facto. d. Be upheld as entering into a unilateral contract.

b. Be found to lack consideration as he had a preexisting duty to attend school.

Ralph is injured in an automobile accident. The other driver pays Ralph $10,000, and Ralph agrees not to sue that other driver. This is an example of: a. A liquidated debt. b. An unliquidated debt. c. An accord and satisfaction. d. A and C only. e. B and C Only.

b. An unliquidated debt.

Consideration can best be described as: a. Something of legal value. b. What is received in a contract. c. A promise. d. A counteroffer. e. A signature on a contract.

a. Something of legal value.

In which of the following situations is there adequate consideration on the part of the promisor to support enforcement of a contract? a. Bob, a police officer, promises to drive by your house and check on it during his off-duty time. b. Sam, a first-grade teacher, promises to make sure your child learns his lessons in class for $500. c. LBM Corporation, at Fred's retirement dinner, promises to pay Fred $2,000 a month during his retirement because of his years of dedication to the company. d. I promise to buy a bike from you for $400 if I decide I'm going to get a new bike this year. e. Billy, because of all that his mother did in raising him, promises her that he will buy her a new car.

a. Bob, a police officer, promises to drive by your house and check on it during his off-duty time.

Two friends, Ann and Mary, are having margaritas at happy hour. There had been no discussion of who would pay for the drinks. After the third round of drinks, Ann said, "I will pay for everything tonight including your drinks." A couple of minutes later, Ann says, "I've changed my mind. I just remembered that they might be having layoffs at my job tomorrow." Mary wants to force Ann to perform on her promise and threatens to sue. In this circumstance, a court would: a. Not require Ann to follow through on the promise because it was a gratuitous promise. b. Require Ann to follow through on the promise under the doctrine of promissory estoppel. c. Require Ann to follow through on the promise if Mary had previously paid a comparable amount for food or drinks consumed by Ann. d. Require Ann to follow through on the promise if it would be a hardship for Mary to pay for her own drinks. e. Not require Ann to follow through on the promise because it would encourage Mary to drink.

a. Not require Ann to follow through on the promise because it was a gratuitous promise.

In which of the following situations have both parties given consideration to support a contract? a. Pat, an accounting professor, agrees to tutor one of her students in the study of French for $10 per hour. b. Pat, a police officer, agrees to patrol someone's neighborhood while on duty for $100 a week. c. Pat, because of the great job that a contractor did in building an addition onto her house last year, promises to give the contractor an extra $1,000. d. Pat promises to give her mother $100 per month for the next 10 years for all the work that her mother did in raising Pat.

a. Pat, an accounting professor, agrees to tutor one of her students in the study of French for $10 per hour.

Frank is a loyal employee who has spent much time above and beyond the call of duty promoting his employer's company on weekends. Frank's boss says to him, "Because of all this extra work you have done, you'll get a $1,000 bonus next month." Because of this statement: a. The company is not obligated to pay him because the consideration is past consideration. b. The company is not obligated to pay because there was a preexisting duty. c. The company is obligated to pay because Frank has performed the extra work. d. The company is obligated to pay because there is an implied-in-law contract.

a. The company is not obligated to pay him because the consideration is past consideration. past consideration: you can't be rewarded for something that's been done already. for past actions.

There is an existing contract calling for Seller to deliver 1,000 widgets to Buyer. Buyer says to Seller, "I would like to buy 100 additional units at the same price." Seller responds, "We promise to sell you the 100 extra units if we decide not to sell them to other customers." Regarding only the sale of the extra 100 units: a. There is no consideration due to an illusory promise. b. There is no consideration due to a preexisting duty. c. There is no consideration due to a past consideration. d. There is consideration due to promissory estoppel. e. There is consideration due to a legal detriment on both sides.

a. There is no consideration due to an illusory promise.

Which of the following constitutes legal consideration? a. A promise to make a gift. b. A promise based upon a change in duties and payments. c. A promise based upon a moral obligation. d. A promise based upon past consideration. e. A promise based upon a preexisting duty.

b. A promise based upon a change in duties and payments.

Lisa enters into a contract with Acme Groceries, Inc., in which she promises to purchase groceries "as she determines appropriate in the future" from Acme, and Acme promises to sell such groceries to Lisa. This is an example of: a. Adequate consideration; a promise for a promise. b. An illusory promise by Lisa. c. An output contract. d. An option contract. e. A requirements contract.

b. An illusory promise by Lisa.

Cheryl hired Golden Construction Co. to build a house for her. The plans for the house were complex, and expert workmanship was required. After the house was completed, Cheryl liked it so much that she promised to pay Golden a $4,000 bonus. Later, Golden demanded the money, but Cheryl refused to pay it. Golden sues. What is the most probable result? a. Golden wins; the promise was used to entice Golden to do an outstanding job, which is adequate consideration. b. Cheryl wins; the promise is based on past consideration. c. Golden wins; the promise is based on past consideration, which is legally sufficient. d. Golden wins; the promise is based on changed circumstances which makes it enforceable.

b. Cheryl wins; the promise is based on past consideration. past consideration: an act done before a contract is made. you can't be rewarded for something that's been done already. for past actions.

Caterer agrees with Bride to cater Bride's wedding reception for $12 per plate. On the wedding day, Caterer calls Bride saying that some things have come up, and she will have to charge $16 a plate in order to do the catering. Bride agrees. Which is true? a. The $16 is not enforceable because the $12 per plate was past consideration. b. The $16 is not enforceable because of a preexisting duty. c. The $16 is enforceable if the reason for it was beyond Caterer's control. d. The $16 is not enforceable because it means the $12 was an illusory promise. e. The $16 is enforceable if Bride could have found another caterer before the wedding.

b. The $16 is not enforceable because of a preexisting duty.

Farmer Smith hires Joe to drill a new well. Joe looks at the drilling site and quotes Smith a price of $500 for the new well. After drilling a short distance, Joe discovers hard bedrock, which is unexpected in this locality. To drill through this would take substantially more time and cost more. Joe says he will continue, but only if Smith pays him $2,000. Smith agrees. Smith's promise to pay an increased amount is enforceable because: a. This is a valid settlement of a liquidated debt. b. This is an unforeseen circumstance. c. This is a Uniform Commercial Code modification. d. This is a preexisting duty. e. This is a novation.

b. This is an unforeseen circumstance.

Which of the following most likely constitutes legal consideration? a. A promise to make a gift. b. A promise to refrain from doing an illegal act. c. A promise to buy all that the promisor needs of an item with specifying a minimum quantity. d. A promise based upon past consideration. e. A promise based upon a preexisting duty.

c. A promise to buy all that the promisor needs of an item with specifying a minimum quantity.

Seasonal Selections, Inc. enters into a contract with Arthur's Tree Farm to purchase all of the balsam fir tree boughs that it will need to make Christmas wreaths for the Christmas season. This contract is: a. An illusory contract. b. An outputs contract. c. A requirements contract. d. A void contract based on illegal consideration. e. Based on a promise that lacks consideration.

c. A requirements contract.

When a seller promises a buyer to sell to he/she all of an item that it produces, this results in: a. An unenforceable illusory contract. b. An enforceable requirements contract. c. An enforceable output contract. d. An enforceable accord and satisfaction. e. An enforceable contract with an option to cancel.

c. An enforceable output contract.

In order for a contract to be valid, it must: a. Be made by a writing signed by adults. b. Be fully performed on both sides. c. Contain an offer, acceptance, and consideration. d. Be properly filed.

c. Contain an offer, acceptance, and consideration.

In a two-party contract, which is true about consideration? a. Only one party must suffer a legal detriment. b. Both parties must receive a benefit. c. Each party must suffer a legal detriment. d. Each party must either receive a benefit or suffer a legal detriment.

c. Each party must suffer a legal detriment.

"Legal detriment" in the context of consideration means: a. Giving up an existing legal right. b. Taking on a new legal duty. c. Giving up an existing legal right or taking on a new legal duty. d. Being found guilty in a criminal case. e. Getting the short end of the deal in a contract.

c. Giving up an existing legal right or taking on a new legal duty.

A promise to deliver merchandise in the future: a. Is not consideration because the merchandise has not yet been delivered. b. Is not consideration because the person delivering the goods does not necessarily receive a benefit for doing so. c. Is consideration because it involves a new legal duty. d. Is consideration so long as the party to deliver the goods received payment before they were delivered.

c. Is consideration because it involves a new legal duty.

A promise to refrain from underage drinking in exchange for $10,000: a. Is just as enforceable as any other promise. b. Is enforceable under a promissory estoppel theory. c. Is not enforceable, as the consideration is illegal. d. May be enforceable if the recipient is a child.

c. Is not enforceable, as the consideration is illegal. promissory estoppel: is when the court order enforcement of a contract that lacks consideration

Lode Mines enters into a contract with Ajax Photo Labs, whereby Ajax agrees to purchase all its requirements of silver needed for photo finishing during the next year, from Lode, at $4.00 per ounce. Over the last 4 years, Ajax has used an average of 10,000 ounces of silver per year. Lode only produces about 15,000 ounces of silver per year. About 2 months into the contract, the price of silver skyrockets to $50 per ounce. Ajax immediately orders an additional 50,000 ounces from Lode. Lode refuses to deliver, and Ajax sues. What is the most likely outcome? a. Lode wins; requirements contracts are not enforceable because they do not contain a quantity. b. Ajax wins; requirements contracts are enforceable. c. Lode wins; even if requirements contracts are enforceable, the parties must act in "good faith," and Ajax is acting in bad faith. d. Ajax wins; they are acting in "good faith," and this was a risk that Lode assumed.

c. Lode wins; even if requirements contracts are enforceable, the parties must act in "good faith," and Ajax is acting in bad faith.

An agreement that is lacking consideration: a. Is void as against public policy. b. Is not enforceable, and thus cannot be performed. c. Is enforceable only if in writing. d. Will be enforced only against the party who gave consideration. e. Is not enforceable, but can be voluntarily performed.

e. Is not enforceable, but can be voluntarily performed.

Jean had just received a promotion and substantial raise. Jean felt her raise would give her much more spending money, thus she planned to buy a new sports car. Jean felt she did not need to worry about receiving the best price for her old car, which she thought was worth about $3,000. She sold the car for $500. In fact, the car was worth $5,000, and Jean had not taken into account the additional taxes on her extra income. Jean also decided that for a single mother a sports car would not be very practical. Jean wanted to return the $500 to the purchaser and get her car back. Assuming that Jean will return the $500 to the buyer, Jean can: a. Get her car back if the buyer knew that Jean should not have planned to get a sports car. b. Get her car back if Jean can prove that the buyer knew the car was worth many times what he paid for it. c. Not get her car back because the court would not inquire into the difference in the value of the consideration. d. Get the car back based solely on the disparity in the price and value. e. Not get the car back if the buyer had relied on getting a bargain price, but if the buyer could not prove that, Jean could get the car back.

c. Not get her car back because the court would not inquire into the difference in the value of the consideration.

The requirement that consideration be bargained-for means that: a. The consideration in a contract must be exchanged simultaneously. b. The values of the consideration cannot be greatly different between parties. c. The inducement for each party to give consideration was the consideration of the other party. d. One party determines the consideration to be given by each party.

c. The inducement for each party to give consideration was the consideration of the other party.

Worldwide Motor Company promised to buy all its needs, "taking into account tires purchased from other tire companies," for automobile tires from Good Tire Co., and Good promised to sell these tires. The contract also provided that Worldwide could cancel the contract at any time, without penalty, and could buy tires from other manufacturers if it so desired. This contract is: a. Valid and fully enforceable. b. Unenforceable, because requirement contracts are generally unenforceable. c. Unenforceable, because Worldwide's promise is illusory and there is no mutuality of obligation. d. Unenforceable, because output contracts are generally unenforceable.

c. Unenforceable, because Worldwide's promise is illusory and there is no mutuality of obligation.

To meet the contractual requirement, consideration must be: a. Fair and reasonable according to the reasonable person standard. b. Approximately equal in overall value. c. Such that each party receives a benefit. d. Bargained-for and involve a legal detriment to each party. e. Recorded in writing in the contract.

d. Bargained-for and involve a legal detriment to each party.

Frieda is at a Denver Broncos Football game, and she is being bothered by several extremely drunk spectators in nearby seats. She asks a security officer to do something, but the security officer refuses. She then offers the security officer $100 if he'll stop the problem. He agrees, then warns the drunk spectators, after which the problem stops. Frieda refuses to pay the security officer. Is there sufficient consideration in this agreement? a. Yes, because the detriment of paying $100 was bargained for. b. Yes, because there was one party who suffered a detriment. c. No, because this agreement violates public policy. d. No, because one of the parties did not suffer legal detriment. e. Yes, so long as $100 is a fair price for the services of the security officer.

d. No, because one of the parties did not suffer legal detriment.

An illusory promise is: a. Never sufficient to be consideration because it is considered fraudulent. b. Supported by consideration if the acceptance is also illusory. c. Usually considered to be sufficient consideration, although some states will consider it to not meet the consideration requirement if the amount and circumstances "shock the conscience" of the court. d. One that a party has to perform if he or she chooses to do so.

d. One that a party has to perform if he or she chooses to do so.

Ricky signs a 2-year contract to play basketball for the Jolters, for $100,000 per game. Right before a big game, Ricky goes to the owner and says that he will not play unless the owner pays him an additional $5,000 per game. The owner, being desperate, agrees. Now that the season is over, Ricky demands his additional compensation, but the owner refuses to pay. Ricky sues. Most likely: a. Ricky wins; this is a valid modification of an earlier contract. b. Owner wins; contracts can never be modified. c. Ricky wins; this is a modification under the UCC which needs no new consideration to be enforceable. d. Owner wins; Ricky was under a prior duty to play basketball, so Ricky's new promise is not supported by consideration. e. Ricky wins; this is a case of a modification due to unforeseen circumstances, and the modification is enforceable.

d. Owner wins; Ricky was under a prior duty to play basketball, so Ricky's new promise is not supported by consideration.

Mary promises to give her car to her friend. The friend sells his current car for a fairly low price because he is expecting to get a nearly new car from his rich and generous friend, Mary. Mary changes her mind and decides to keep the car. If the friend sues Mary, the court most likely will: a. Require Mary to give her friend the car because his sale of his car was consideration. b. Require Mary to give her friend the car because Mary made an illusory promise. c. Not require Mary to do anything because this was a gift promise. d. Require Mary to pay damages to the friend for any loss he incurred in connection with Mary not keeping her promise.

d. Require Mary to pay damages to the friend for any loss he incurred in connection with Mary not keeping her promise.

Which of the following can be considered consideration? a. A promise to perform a service in the future. b. Payment of cash. c. Actual performance of a service. d. B and C only. e. A, B, and C.

e. A, B, and C.

An agreement to settle an earlier contract that was in dispute is: a. An illusory promise. b. A putout contract. c. A novation. d. The exercise of an option to cancel. e. An accord and satisfaction.

e. An accord and satisfaction. suspends original contract until accord is performed. Satisfaction of accord discharges both original contract and accord. Aggrieved party may either enforce accord or the original.