Question 1

A court is not likely to allow an exception to the preexisting duty rule even if extraordinary difficulties arise that were totally unforeseen at the time a contract was formed.

Accepted Answer

A) True 
 B)False

Question 2

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 only 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 only if Guardian Security pays. 
B)  an illusory contract. 
C)  barred by the preexisting duty rule. 
D)  barred by the doctrine of promissory estoppel.

Question 3

Industrial Engineering, Inc., promises to give stock options to Jasmine for processes she has already designed for the firm. This promise is enforceable

Accepted Answer

A)  because it is a new contract. 
B)  because it is an illusory promise. 
C)  because it is supported by past consideration. 
D)  under no circumstances. 
A)  because it is a new contract. 
B)  because it is an illusory promise. 
C)  because it is supported by past consideration. 
D)  under no circumstances.

Question 4

Dave's uncle tells Dave that if "he feels that Dave deserves it," he will give Dave $10,000 when Dave graduates from college. Dave's uncle's promise is

Accepted Answer

A)  illusory. 
B)  a contract. 
C)  a forbearance. 
D)  a preexisting duty. 
A)  illusory. 
B)  a contract. 
C)  a forbearance. 
D)  a preexisting duty.

Question 5

In contract law, the term consideration refers to the serious thought that underlies a party's intent to enter into a contract.

Accepted Answer

A) True 
 B)False

Question 6

Quentin questions whether there is consideration for his contract with Rainey to exchange his performance with the Symphonic Saxophone Sextet for her payment of a certain amount. 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.

Question 7

To be legally sufficient, consideration must be evidenced by something tangible.

Accepted Answer

A) True 
 B)False

Question 8

A covenant not to sue does not always bar further recovery.

Accepted Answer

A) True 
 B)False

Question 9

Qiana writes a check to Payday Loans, Inc., in an amount that represents half of her debt to the lender. On the back of the check, Qiana includes the words "payment in full." Payday agrees to accept the lesser sum and cashes the check. This dis?charges the entire debt

Accepted Answer

A)  if the debt is liquidated. 
B)  if the debt is past due. 
C)  if the debt is unliquidated. 
D)  under no circumstances. 
A)  if the debt is liquidated. 
B)  if the debt is past due. 
C)  if the debt is unliquidated. 
D)  under no circumstances.

Question 10

A determination of whether consideration exists depends on a comparison of the values of the things exchanged.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Statutes of limitations in all states require a debtor to pay a debt within a specified period of time.

Accepted Answer

A) True 
 B)False

Question 13

While sailboarding, Jolene is injured when Kilroy carelessly crosses her path. Kilroy's insurance company offers Jolene $50,000 to release Kilroy from liability, and she accepts. Later, she learns that her injuries are more serious than she realized. The release is

Accepted Answer

A)  enforceable. 
B)  unenforceable because Jolene's injuries are unforeseeably difficult. 
C)  unenforceable because Kilroy has a preexisting duty to pay. 
D)  unenforceable because the release is an illusory promise. 
A)  enforceable. 
B)  unenforceable because Jolene's injuries are unforeseeably difficult. 
C)  unenforceable because Kilroy has a preexisting duty to pay. 
D)  unenforceable because the release is an illusory promise.

Question 14

Esmeralda promises to pay Fiorello $400 because "he does not have as much money as other people." Esmeralda's promise is not enforceable because

Accepted Answer

A)  society does not want gifts cheapened by making them legally enforceable. 
B)  the redistribution of wealth on a one-to-one basis is not a valid social goal. 
C)  Esmeralda could have paid more. 
D)  Fiorello has not given consideration in return. 
A)  society does not want gifts cheapened by making them legally enforceable. 
B)  the redistribution of wealth on a one-to-one basis is not a valid social goal. 
C)  Esmeralda could have paid more. 
D)  Fiorello has not given consideration in return.

Question 15

Todos, Ltd., agrees to market the products of United Sales, Inc., in Venezuela. When the gov?ern?ment is unexpectedly overthrown in a revolution, Todos can continue to fulfill its contract but only for a much higher price. United agrees to pay but later files a suit to recover the difference. The court will most likely rule that

Accepted Answer

A)  a change in government is a risk ordinarily assumed in business. 
B)  an unforeseen difficulty supported the contract modification here. 
C)  Todos engaged in extortion or the so-called holdup game. 
D)  Todos had a preexisting duty to supply the goods at the initial price. 
A)  a change in government is a risk ordinarily assumed in business. 
B)  an unforeseen difficulty supported the contract modification here. 
C)  Todos engaged in extortion or the so-called holdup game. 
D)  Todos had a preexisting duty to supply the goods at the initial price.

Question 16

In many states, a release contract must be in a signed writing.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Valley Paragliders Association files a suit against Wing Designers, Inc., claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the considera?tion if

Accepted Answer

A)  there is a large disparity in the amount of consideration exchanged. 
B)  the consideration involves the performance of services. 
C)  something of value passed between the parties. 
D)  the consideration is worth less than $100. 
A)  there is a large disparity in the amount of consideration exchanged. 
B)  the consideration involves the performance of services. 
C)  something of value passed between the parties. 
D)  the consideration is worth less than $100.

Question 19

The element of bargained-for exchange distinguishes contracts from gifts.

Accepted Answer

A) True 
 B)False

Question 20

Mobile Minutes Company offers Nate an unlimited number of monthly phone minutes for $4.50 per month. Nate ac?cepts. If a dispute arises, a court would likely

Accepted Answer

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

Exam 13: Consideration

A court is not likely to allow an exception to the preexisting duty rule even if extraordinary difficulties arise that were totally unforeseen at the time a contract was formed.

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

Industrial Engineering, Inc., promises to give stock options to Jasmine for processes she has already designed for the firm. This promise is enforceable

Dave's uncle tells Dave that if "he feels that Dave deserves it," he will give Dave $10,000 when Dave graduates from college. Dave's uncle's promise is

In contract law, the term consideration refers to the serious thought that underlies a party's intent to enter into a contract.

Quentin questions whether there is consideration for his contract with Rainey to exchange his performance with the Symphonic Saxophone Sextet for her payment of a certain amount. To constitute consideration, there must be

To be legally sufficient, consideration must be evidenced by something tangible.

A covenant not to sue does not always bar further recovery.

Qiana writes a check to Payday Loans, Inc., in an amount that represents half of her debt to the lender. On the back of the check, Qiana includes the words "payment in full." Payday agrees to accept the lesser sum and cashes the check. This dis?charges the entire debt

A determination of whether consideration exists depends on a comparison of the values of the things exchanged.

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

Statutes of limitations in all states require a debtor to pay a debt within a specified period of time.

While sailboarding, Jolene is injured when Kilroy carelessly crosses her path. Kilroy's insurance company offers Jolene $50,000 to release Kilroy from liability, and she accepts. Later, she learns that her injuries are more serious than she realized. The release is

Esmeralda promises to pay Fiorello $400 because "he does not have as much money as other people." Esmeralda's promise is not enforceable because

In many states, a release contract must be in a signed writing.

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

Valley Paragliders Association files a suit against Wing Designers, Inc., claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the considera?tion if

The element of bargained-for exchange distinguishes contracts from gifts.

Mobile Minutes Company offers Nate an unlimited number of monthly phone minutes for $4.50 per month. Nate ac?cepts. If a dispute arises, a court would likely

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