ACCT 324 - Chapter 15

Which of the following is not an type of consideration? A promise to refrain from doing something A benefit to the promisee A detriment to the promisor A promise to accept a gift

A promise to accept a gift

Andy is an artist and Jane runs a famous art gallery. Jane calls Andy and tells him she has seen some of his work and likes it. She tells him to bring his newest paintings to her gallery and says "I promise that if I like them, I will show them in my gallery." Which of the following is true? (Check all that apply.) Andy has no contract to compel Jane to show his paintings. Jane made an illusory promise. If Andy's paintings are good, Jane must show them in the gallery. Jane must show the paintings whether she likes them or not.

Andy has no contract to compel Jane to show his paintings. Jane made an illusory promise.

William tells his neighbor George that he will give George a job as his butler if George promises to drop out of college. Which of the following is true? George's promise to refrain from going to college is not a consideration. Walter must pay William for the referral. William's promise is not enforceable. George's promise to refrain from going to college is consideration.

George's promise to refrain from going to college is consideration.

When does the court look at the adequacy of consideration in a contract? (Check all that apply.) If the court thinks that one party made a good bargain If the court believes fraud occurred If the court thinks that the deal was not profitable for all the parties involved If the court thinks that undue influence was used

If the court believes fraud occurred If the court thinks that undue influence was used

Bobby built a dog house for Rhonda and Rhonda agreed to pay Bobby $1,500. Rhonda sends Bobby a check for $1,000 with a note that says "this is all I can pay you." Bobby cashes the check. Which of the following is true? (Check all that apply.) Rhonda does have to pay Bobby the remaining $500. The $1,500 is liquidated debt. Rhonda does not have to pay Bobby the rest of the $500. There is no dispute that Rhonda owes Bobby $1,500.

Rhonda does have to pay Bobby the remaining $500. The $1,500 is liquidated debt. There is no dispute that Rhonda owes Bobby $1,500.

What are the conditions for promissory estoppel to occur? (Check all that apply.) A promise is exchanged for a promise. To avoid an injustice, the promise must be enforced. A party reasonably relies on another's promise. One party makes a promise and knows the other party will rely on it.

To avoid an injustice, the promise must be enforced. A party reasonably relies on another's promise. One party makes a promise and knows the other party will rely on it.

Under the UCC, writing "paid in full" on a check for less than the full amount of the debt owed will not be an accord and satisfaction unless the creditor inadvertently cashes the check and waits longer than 90 days to offer the debtor repayment in the same amount, or unless the check was sent to a credit card company. words "paid in full" are written conspicuously with red ink and 14-point font. debt was for medical services. check is sent to a special address for disputed amounts per the creditor's request.

check is sent to a special address for disputed amounts per the creditor's request.

A promise to refrain from doing something is sufficient: _______. conditioning deliberation determination consideration

consideration

In some cases, if past consideration was given with the expectation of ______ payment, the court may enforce the promise. future honorary gratuitous no

future

Leslie sold Tom her house for $5,000, but lied to Tom because she did not actually own the house. The court is likely to: _______. enforce the contract and make Tom pay Leslie $5,000 order Leslie to buy the house from it's true owner and give it to Tom not enforce the contract order Tom to pay the actual owner of the property

not enforce the contract

Performance of a duty you are obligated to do under the law is not good consideration. This is known as the ______ duty rule. collaborative conditional preexisting perfunctory

preexisting

Promissory estoppel and contracts under ______ are two exceptions to the common law rule requiring consideration. recognizance seal ratification subjective interpretation

seal

If a business does inadvertently cash a "paid-in-full" check, it has _______ days to offer the debtor repayment in the same amount. 60 30 90 120

90

Sheila tells Ed that if Ed fixes her air conditioner by the end of the day, Sheila will pay Ed $500. Which of the following is true? Ed and Sheila have entered into a valid bilateral contract. Ed and Sheila have entered into a valid unilateral contract. There is no contract because there is no consideration. If Ed fixes the air conditioner by the end of the day, Sheila does not have to pay him.

Ed and Sheila have entered into a valid unilateral contract.

Sheila tells Ed that if Ed fixes her air conditioner by the end of the day, Sheila will pay Ed $500. Which of the following is true? There is no contract because there is no consideration. Ed and Sheila have entered into a valid unilateral contract. If Ed fixes the air conditioner by the end of the day, Sheila does not have to pay him. Ed and Sheila have entered into a valid bilateral contract.

Ed and Sheila have entered into a valid unilateral contract.

Identify the true statements about past consideration. (Check all that apply.) It is enforceable if a party unexpectedly benefits from the past consideration provided by the other party. It is enforceable if the circumstances of the party that provided the past consideration change. It is enforceable to the extent necessary to avoid injustice. It is enforceable if it was given with the expectation of future payment.

It is enforceable to the extent necessary to avoid injustice. It is enforceable if it was given with the expectation of future payment.

Identify exceptions to the preexisting duty rule. (Check all that apply.) UCC Article 2 (sale of goods) Additional work required to fulfill the promised obligation Lack of resources to fulfill the promised obligation Unforeseen circumstances

UCC Article 2 (sale of goods) Additional work required to fulfill the promised obligation Unforeseen circumstances

Which of the following statements is true about past consideration? (Check all that apply.) It is not a real consideration. It includes consideration from both sides. It is enforceable by the law. It refers to a situation where one party provides value before the promise is made.

It is not a real consideration. It refers to a situation where one party provides value before the promise is made.

Today, how many states will still enforce contract under seal even if it is not supported by consideration? 48 2 10 50

10

Which of the following is a correct statement regarding a promise to refrain from doing something you are legally entitled to do? A promise to not do something you are legally entitled to do is good contract consideration only if the contract involves goods, not services. A promise to not do something you are legally entitled to do is good contract consideration only if the contract involves services, not goods. A promise to not do something you are legally entitled to do is good contract consideration only if it equals in value the other party's promise. A promise to not do something you are legally entitled to do is sufficient consideration for a contract.

A promise to not do something you are legally entitled to do is sufficient consideration for a contract.

Which of the following is true about a bilateral contract? (Check all that apply.) A promise standing alone with nothing in return is sufficient consideration. A promise to perform has value. It is never an oral contract. A promise in exchange for a promise can be consideration.

A promise to perform has value. A promise in exchange for a promise can be consideration.

Identify exceptions to the preexisting duty rule. (Check all that apply.) Lack of resources to fulfill the promised obligation Additional work required to fulfill the promised obligation UCC Article 2 (sale of goods) Unforeseen circumstances

Additional work required to fulfill the promised obligation UCC Article 2 (sale of goods) Unforeseen circumstances

Anna promises Elsa that she will clean Elsa's house and Elsa promises Anna she will pay Anna $100 when Anna is done. Which of the following is true? (Check all that apply) Anna and Elsa's promises are an exchange of something of value. There is no contract because there is no consideration. Anna's promise in exchange for Elsa's promise is sufficient consideration. Anna and Elsa have formed a bilateral contract.

Anna and Elsa's promises are an exchange of something of value. Anna's promise in exchange for Elsa's promise is sufficient consideration. Anna and Elsa have formed a bilateral contract.

Which of the following statements are true of legal consideration? (Check all that apply.) As a general rule, a contract need not be supported by consideration in order for it to be binding. Any consideration, however small, will support a promise. The consideration of love and affection has been deemed insufficient to support a conveyance. A court will not regulate the amount of consideration in the absence of fraud.

Any consideration, however small, will support a promise. A court will not regulate the amount of consideration in the absence of fraud.

Scott needs his cars washed by tomorrow afternoon, so he calls Betty and tells her he'll pay her $100 if she washes both cars the next morning. Betty tells Scott, "I'll do it if I wake up in time." Which of the following statements is true? Scott's promise to pay Betty $100 is an executed unilateral contract. Betty and Scott have formed a binding contract supported by consideration. Betty has promised to wash Scott's cars. Betty has not promised to wash Scott's cars.

Betty has not promised to wash Scott's cars.

Which of the following is true about a unilateral contract? (Check all that apply.) It refers to a promise for a promise. It is a promise in exchange for performance. It is a real contract because it is a mutual exchange of value. It is not a real contract because it lacks consideration.

It is a promise in exchange for performance. It is a real contract because it is a mutual exchange of value.

Joan teaches Bobby how to shoot an outside jump shot in basketball. Bobby becomes such a good basketball player he gets a full scholarship to college and becomes highly sought after by professional teams. Just before he signs a contract with a pro team, Bobby tells Joan, "I promise I'll give you $500,000 when I sign that contract. I owe you for teaching me that jump shot." Which of the following is true? Joan is entitled to $500,000 from Bobby when he signs his professional contract. Joan's work with Bobby in the past is not consideration to enforce Bobby's promise. Bobby can claim undue influence as a defense to the contract. Although Bobby does not owe Joan $500,000, he does owe her the reasonable value of her coaching services.

Joan's work with Bobby in the past is not consideration to enforce Bobby's promise.

Patty and Mario dispute whether Patty owes Mario $1,000. Patty asks Mario if she can give him her gold necklace, worth $500, in full payment of the debt. Mario agrees and takes the gold necklace. Which of the following is true? Mario must give the necklace back to Patty. Patty has committed fraud. Mario taking the necklace constitutes an accord and satisfaction. Patty still owes Mario $500 after giving him the gold necklace.

Mario taking the necklace constitutes an accord and satisfaction.

Phil tells Gloria that if she works for him full time, he'll pay her $1,000 a week. As a result and based on Phil's promise, Gloria quits her job at the department store and puts a down payment on a car. When Gloria shows up at Phil's to start work, Phil tells her he's changed his mind about the full time job. What are Gloria's options? It was unreasonable for Gloria to quit her job and put a down payment on a car. Phil's promise is enforceable because it is supported by consideration. Phil's promise is always unenforcible because it was not in writing. The best way to enforce Phil's promise is to assert promissory estoppel.

The best way to enforce Phil's promise is to assert promissory estoppel.

Walter contracts to purchase Marie's mansion and estate for $50,000. Marie's mansion and estate has a property tax value of $1 million. There is no fraud or undue influence involved in the transaction. Which of the following is an incorrect statement regarding the enforcement of this contract? The $50,000 is just as sufficient and valuable as a larger sum to support the legal enforcement of this contract. The court will not question the value of the exchanged consideration. The consideration for the contract is the mansion. The court will find the $50,000 an insufficient amount of consideration and cancel the contract.

The court will find the $50,000 an insufficient amount of consideration and cancel the contract.

Which of the following is true about a partial payment of a liquidated debt? The debt remains outstanding. If more than 50% of the debt is paid, the debt is fully paid. The rest of the debt is forgiven if the partial payment is accepted. Liquidated debt is a product of fraud.

The debt remains outstanding.

Forrest hires Nadine to turn his basement into a family room for $50,000. About halfway through, Nadine discovers for the first time that the wood in the floor of the basement was riddled with mold and all the wood had to be removed and replaced. Nadine tells Forrest that it will cost him an additional $10,000 for this work. Which of the following is true? Nadine was entitled to charge Forrest the $10,000 to avoid an unjust enrichment. Nadine would only be able to collect the $10,000 if the contract was registered with the Secretary of State. The mold was an unforeseen circumstance to the basement work, and it was lawful for Nadine to charge Forrest for the additional work. Nadine had a preexisting duty to work on the basement and could not charge Forrest the extra $10,000.

The mold was an unforeseen circumstance to the basement work, and it was lawful for Nadine to charge Forrest for the additional work.

Sam takes photos at the Callie's wedding. Sam thinks Callie owes him $1,000 for the wedding, while Callie think she only owes Sam $750. Callie sends Sam a check for $750. Which of the following is true? This is a liquidated debt only if the check was mailed within five days of the wedding. This is a liquidated debt. This is an unliquidated debt. Callie still owes Sam $250.

This is an unliquidated debt.

Wanda works for Humongous Corporation. Part of her job, for which she was hired 10 years ago, is to prepare a monthly report of all transactions in her department. After 10 years, Wanda tells Humongous that she wants another $500 a month to prepare the reports. Which of the following is true? Wanda is using undue influence to gain a $500 a month benefit she is not entitled to receive. Humongous must pay Wanda the $500 a month. $500 a month is sufficient consideration. Wanda has an existing contractual duty to prepare the report.

Wanda has an existing contractual duty to prepare the report.

Without being asked, Johan washed his neighbor Bill's car every Saturday for a month. At the end of the month, Johan demanded payment of $100 from Bill for his services. Bill refused. If Johan sues for breach of contract, Johan will likely lose because there was no ______ exchange. equal executory bargained-for perfunctory

bargained-for

For a(n) ______ debt, if the debtor offers to pay less money than is owed as full payment and the creditor agrees, there is not a(n)______, and even if the debtor pays the money agreed to, the creditor may nevertheless sue for the balance it believes is owed. liquidated; satisfaction unliquidated; accord liquidated; accord unliquidated; satisfaction

liquidated; accord

Consideration, as a required contractual element, can be: ________. (Check all that apply.) money friendship inheritance service

money service

If the parties disagree about the amount of money owed, the debt is ______. paid unliquidated liquidated outstanding

unliquidated