Business Law I chapter 10 quiz

Allen promises to pay Barb, his niece, $5,000 if she obtains her degree at City University, where she is in her third year. Barb graduates. Allen is

required to pay because Barb obtained a degree at City

Greta files a suit against Home Repair Corporation under the doctrine of promissory estoppel. Greta must show that

she justifiably relied on Home Repair's promise

For the doctrine of promissory estoppel to be applied, there must be no clear or definite promise.

False

Forbearance is undertaking an action that one has a legal right to undertake.

False

Consideration is the value given in return for a promise or in return or a performance.

True

For an accord and satisfaction to occur, the amount of a debt must be in dispute.

True

Rescission is the unmaking of a contract so as to return the parties to the positions they occupied before the contract was made.

True

Rose questions whether there is consideration for her contract to perform with Saxophone Symphony. To constitute consideration, there must be

a bargained-for exchange

Adequacy of consideration refers to "how much" consideration is given.

True

Consideration refers to the time that a party takes to evaluate a deal.

False

A promise to do what one already has a legal duty to do constitutes legally sufficient consideration.

False

An obligation is enforceable only if it is made in return for actions or events that have already taken place.

False

Dean, the president of Billing & Credit Company, promises to pay his employee Ewing, who is dangerously obese, $10 for every pound that he loses within the next eleven months. Ewing agrees, diets and exercises, loses 154 pounds, and asks Dean for $1,540. Dean refuses to pay, saying that he does not remember the promise, but that even if he did make it, there was no consideration, and Ewing's improved health is a sufficient benefit for his effort and sacrifice. Ewing files a suit against Dean. In whose favor is the court likely to rule, and why?

The court is in favor of Ewing because he had a verbal contract with Dean. The contract is legal because it fulfills the four components of the agreement, capacity (mental), consideration, and legality and because all four components were finalized.

Best Restoration, Inc., begins renovating houses for City Edge Property Company under a contract for a stated amount per house. After six months, Best demands an extra $20,000 per house. City Edge agrees to pay. Refer to Fact Pattern 10 - 3. Suppose Best asks for the extra $20,000 because of extraordinary difficulties that were totally unforeseen at the time the contract was formed. The agreement is

enforceable due to unforeseen difficulties

A fire threatens to engulf a commercial building in Metro City. The building's owner promises a cash reward to the Metro Fire Department to extinguish the fire. The firefighters cannot claim the reward because

extinguishing the fire is the firefighters' preexisting duty

Business Center Inc. and Catering LLC have an executory contract. They agree to rescind it and simultaneously enter into a new contract. If the previous contract was subject to a preexisting duty, the new contract will most likely be

invalid

Rex contracts with Spicy Pizza to deliver its products. Later, both parties inform each other that they would like to cancel the contract. Refer to Fact Pattern 10-4. The contract between Rex and Spicy is completely rescinded. Later, Rex offers to make a new deal to deliver Spicy's products. Spicy is willing to deal, but for a new price. Rex and Spicy

may agree to a new contract that includes the new price

Rex contracts with Spicy Pizza to deliver its products. Later, both parties inform each other that they would like to cancel the contract.

may rescind their contract to the extent that it is executory

Molly's motorcycle is damaged in an accident caused by Luc's negligence. Luc agrees to pay Molly $25,000 if she agrees to release him from further liability. Molly agrees. If Molly's damages ultimately exceed $25,000, she can

not recover the balance

Best Restoration, Inc., begins renovating houses for City Edge Property Company under a contract for a stated amount per house. After six months, Best demands an extra $20,000 per house. City Edge agrees to pay. Refer to Fact Pattern 10 - 3. Suppose Best offers no reason for the extra $20,000, but asserts that it will stop work if it is not paid. The agreement is

unenforceable due to the preexisting duty rule