Question 1

Parties are usually free to bargain as they wish.

Accepted Answer

A) True 
 B)False  True

Question 2

Centre City Properties, Inc., owns and manages a warehouse. DIY Home Improvement Stores agrees to lease the warehouse for six years. Under the lease, DIY is obligated to pay all of the utility costs. Two years into the term, DIY asks Centre City to modify the lease to provide that the utility costs will be split equally between them. The landlord agrees, but later decides it does not want to share the costs and refuses to pay. Is Centre City bound to its agreement to share the utility costs? Why or why not?

Accepted Answer

Centre City Properties, Inc., the landlord, is not bound to its agreement to share utility costs with DIY Home Improvement Stores, its tenant. Under the preexisting duty rule, a promise to do what one already has a legal duty to do does not constitute legally sufficient consideration. The preexisting legal duty may arise out of a previous contract. And if a party is already bound by contract to perform a certain duty, that duty cannot serve as consideration for a second contract. Thus, a modification of a contract requires consideration to be binding.
In this question, the agreement to split the utility costs was a modification of the original terms of the parties' lease. Centre City is not bound because the landlord did not receive any consideration in exchange for the agreement to split the utility costs.

Question 3

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

Accepted Answer

A)  ​a payment. 
B)  ​a performance. 
C)  ​a bargained-for exchange. 
D)  ​serious thought underlying each party's intent to contract. 
A)  ​a payment. 
B)  ​a performance. 
C)  ​a bargained-for exchange. 
D)  ​serious thought underlying each party's intent to contract. C

Question 4

After an accident with a vehicle licensed to Guardian Security Company, Heidi signs a covenant not to sue Guardian Security for damages in a tort action if it pays for the damage to her car. This covenant is

Accepted Answer

A)  ​a bar to recovery if Guardian Security pays. 
B)  ​an illusory contract. 
C)  ​barred by the preexisting duty rule. 
D)  ​barred by the doctrine of promissory estoppel. 
A)  ​a bar to recovery if Guardian Security pays. 
B)  ​an illusory contract. 
C)  ​barred by the preexisting duty rule. 
D)  ​barred by the doctrine of promissory estoppel.

Question 5

Under the doctrine of promissory estoppel, a promise will not be enforced unless it is supported by consideration.

Accepted Answer

A) True 
 B)False

Question 6

Kim promises to pay Leo $500 to install a sump pump in Kim's warehouse. Leo completes the installation. The act of installing the pump

Accepted Answer

A)  ​imposes a moral obligation on Kim to pay Leo. 
B)  ​imposes no obligation on Kim unless she is satisfied with the job. 
C)  ​is not sufficient consideration because it is not goods or money. 
D)  ​is the consideration that creates Kim's obligation to pay Leo. 
A)  ​imposes a moral obligation on Kim to pay Leo. 
B)  ​imposes no obligation on Kim unless she is satisfied with the job. 
C)  ​is not sufficient consideration because it is not goods or money. 
D)  ​is the consideration that creates Kim's obligation to pay Leo.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

​Fact Pattern 13-4
Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay.
-Refer to Fact Pattern 13-4. If Teatro says it is asking for the extra $250,000 because it has encountered extraordinary unforeseen difficulties that will add considerable cost to the project, the agreement is

Accepted Answer

A)  ​enforceable as the consideration is past. 
B)  ​enforceable because of unforeseen difficulties. 
C)  ​unenforceable as an illusory promise. 
D)  ​unenforceable due to the preexisting duty rule. 
A)  ​enforceable as the consideration is past. 
B)  ​enforceable because of unforeseen difficulties. 
C)  ​unenforceable as an illusory promise. 
D)  ​unenforceable due to the preexisting duty rule.

Question 9

A release does not require consideration to be legally binding.

Accepted Answer

A) True 
 B)False

Question 10

Fact Pattern 13-3​
Sal contracts with Tasty Pizza to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract.
-Refer to Fact Pattern 13-3. The next day, Sal changes his mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sal and Tasty

Accepted Answer

A)  ​may agree to a new contract, but it cannot include a new price. 
B)  ​may agree to a new contract that includes the new price. 
C)  ​must perform their original contract. 
D)  ​must perform the part of their original contract that is executory. 
A)  ​may agree to a new contract, but it cannot include a new price. 
B)  ​may agree to a new contract that includes the new price. 
C)  ​must perform their original contract. 
D)  ​must perform the part of their original contract that is executory.

Question 11

A release is an agreement in which one party gives up the right to pursue a legal claim against another party.

Accepted Answer

A) True 
 B)False

Question 12

Stephen offers Theresa $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely

Accepted Answer

A)  ​enforce the deal after questioning the adequacy of consideration. 
B)  ​not question the adequacy of the consideration. 
C)  ​rewrite the deal after questioning the adequacy of consideration. 
D)  ​set aside the deal after questioning the adequacy of consideration. 
A)  ​enforce the deal after questioning the adequacy of consideration. 
B)  ​not question the adequacy of the consideration. 
C)  ​rewrite the deal after questioning the adequacy of consideration. 
D)  ​set aside the deal after questioning the adequacy of consideration.

Question 13

Desi's Uncle Eduardo tells Desi, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." This promise

Accepted Answer

A)  ​is illusory. 
B)  ​is enforceable. 
C)  ​relies on forbearance. 
D)  ​consists of a preexisting duty. 
A)  ​is illusory. 
B)  ​is enforceable. 
C)  ​relies on forbearance. 
D)  ​consists of a preexisting duty.

Question 14

Promissory estoppel requires that justice will be better served by the enforcement of the promise.

Accepted Answer

A) True 
 B)False

Question 15

Forbearance is the act of refraining from doing something that one has a legal right to do.

Accepted Answer

A) True 
 B)False

Question 16

For consideration to have "legally sufficient value," it must consist of goods or money.

Accepted Answer

A) True 
 B)False

Question 17

A promise by one party to pay another for refraining from an action that one has a legal right to undertake is enforceable.

Accepted Answer

A) True 
 B)False

Question 18

Jenny promises to pay Kay $500 because "she does not have as much money as other people." Jenny's promise is

Accepted Answer

A)  ​enforceable because society wants people to keep their promises. 
B)  ​enforceable because the redistribution of wealth is a valid social goal. 
C)  ​not enforceable because Jenny could have paid Kyle more. 
D)  ​not enforceable because Kay has not given consideration in return. 
A)  ​enforceable because society wants people to keep their promises. 
B)  ​enforceable because the redistribution of wealth is a valid social goal. 
C)  ​not enforceable because Jenny could have paid Kyle more. 
D)  ​not enforceable because Kay has not given consideration in return.

Question 19

Rudy files a suit against Shakes & Shingles, Roofing Contractor, Inc., under the doctrine of promissory estoppel. Rudy must show that

Accepted Answer

A)  ​he justifiably refused to fulfill a promise to Shakes & Shingles. 
B)  ​he justifiably relied on Shakes & Shingles' promise to his detriment. 
C)  ​Shakes & Shingles justifiably refused to fulfill a promise to him. 
D)  ​Shakes & Shingles justifiably relied on his promise to its detriment. 
A)  ​he justifiably refused to fulfill a promise to Shakes & Shingles. 
B)  ​he justifiably relied on Shakes & Shingles' promise to his detriment. 
C)  ​Shakes & Shingles justifiably refused to fulfill a promise to him. 
D)  ​Shakes & Shingles justifiably relied on his promise to its detriment.

Question 20

Fact Pattern 13-3​
Sal contracts with Tasty Pizza to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract.
-Refer to Fact Pattern 13-3. Sal and Tasty

Accepted Answer

A)  ​may rescind their entire contract. 
B)  ​may rescind their contract to the extent that it is executory. 
C)  ​must perform their entire contract. 
D)  ​must perform the part of their contract that is executory. 
A)  ​may rescind their entire contract. 
B)  ​may rescind their contract to the extent that it is executory. 
C)  ​must perform their entire contract. 
D)  ​must perform the part of their contract that is executory.

Exam 13: Consideration

Parties are usually free to bargain as they wish.

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

After an accident with a vehicle licensed to Guardian Security Company, Heidi signs a covenant not to sue Guardian Security for damages in a tort action if it pays for the damage to her car. This covenant is

Under the doctrine of promissory estoppel, a promise will not be enforced unless it is supported by consideration.

Kim promises to pay Leo $500 to install a sump pump in Kim's warehouse. Leo completes the installation. The act of installing the pump

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

A release does not require consideration to be legally binding.

A release is an agreement in which one party gives up the right to pursue a legal claim against another party.

Stephen offers Theresa $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely

Desi's Uncle Eduardo tells Desi, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." This promise

Promissory estoppel requires that justice will be better served by the enforcement of the promise.

Forbearance is the act of refraining from doing something that one has a legal right to do.

For consideration to have "legally sufficient value," it must consist of goods or money.

A promise by one party to pay another for refraining from an action that one has a legal right to undertake is enforceable.

Jenny promises to pay Kay $500 because "she does not have as much money as other people." Jenny's promise is

Rudy files a suit against Shakes & Shingles, Roofing Contractor, Inc., under the doctrine of promissory estoppel. Rudy must show that

Fact Pattern 13-3​ Sal contracts with Tasty Pizza to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract. -Refer to Fact Pattern 13-3. Sal and Tasty

Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Business and the Constitution

Business Ethics

Tort Law

Strict Liability and Product Liability

Intellectual Property Rights

Internet Law, Social Media, and Privacy

Criminal Law and Cyber Crime

Nature and Terminology

Agreement in Traditional and E-Contracts

Capacity and Legality

Mistakes, Fraud, and Voluntary Consent

The Writing Requirement in Our Digital World

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

The Formation of Sales and Lease Contracts

Title, Risk, and Insurable Interest

Performance and Breach of Sales and Lease Contracts

Warranties

International and Space Law

Negotiable Instruments

Transferability and Holder in Due Course

Liability, Defenses, and Discharge

Banking in the Digital Age

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Agency Formation and Duties

Agency Liability and Termination

Employment, Immigration, and Labor Law

Employment Discrimination

Small Businesses and Franchises

All Forms of Partnerships

Limited Liability Companies and Special Business Forms

Corporate Formation and Financing

Corporate Directors, Officers, and Shareholders

Mergers and Takeovers

Investor Protection, Insider Trading, and Corporate Governance

Administrative Agencies

Consumer Law

Environmental Protection

Antitrust Law

Professional Liability and Accountability

Personal Property and Bailments

Real Property and Landlord-Tenant Law

Insurance

Wills and Trusts

The Legal Environment of Business

Torts and Crimes

Contracts and E-Contracts

Domestic and International Sales and Lease Contracts

Negotiable Instruments

Creditors Rights and Bankruptcy

Agency and Employment

Business Organizations

Government Regulation

Property and Its Protection

Filters

Fact Pattern 13-3 Sal contracts with Tasty Pizza to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract. -Refer to Fact Pattern 13-3. Sal and Tasty