Question 1

Ann's Sandwich Shop and Bob's Coffee Bar are adjacent businesses. Ann, whose small shop has little room for her customers to sit, offers Bob a discount on purchases if he will allow her customers to sit at the tables on the sidewalk in front of his store. Bob's forbearance from asking Ann's customers not to use his tables is legally sufficient consideration

Accepted Answer

A)  because Bob has a legal right to restrict the use of his tables. 
B)  because Ann's customers will undoubtedly use Bob's tables. 
C)  because Ann's small shop has little room for her customers to sit. 
D)  under no circumstances.

Question 2

To be legally sufficient, consideration must be something of value in the eyes of the law.

Accepted Answer

A) True 
 B)False

Question 3

Forfeiting a right to sue to recover further damages can constitute consideration.

Accepted Answer

A) True 
 B)False

Question 4

Maria is the sheriff of Narez, Texas. Oscar robs a Narez gas station and a $500 reward is offered for his capture. When, later, Maria finds and arrests him, with respect to the reward, she can

Accepted Answer

A)  collect it. 
B)  not collect it because she had a preexisting duty to capture Oscar. 
C)  not collect it because it is not legally sufficient consideration. 
D)  not collect it because it is an illusory promise.

Question 5

Raj defends against a breach-of-contract suit by Student Loan Corporation by claiming that their deal-a student loan-was unfair because the consideration for the contract was inadequate. With respect to Raj's defense, the court will most likely rule in favor of the lender on the ground that Raj

Accepted Answer

A)  promised to do something that he had no prior legal duty to do. 
B)  performed an act that he was not otherwise obligated to undertake. 
C)  refrained from an act that he had a legal right to undertake. 
D)  none of the choices.

Question 6

Expo Center Inc. and Festival Music 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

Accepted Answer

A)  invalid. 
B)  enforceable. 
C)  valid. 
D)  voidable.

Question 7

When the doctrine of promissory estoppel is applied, the promisor is estopped, or barred, from performing the promise.

Accepted Answer

A) True 
 B)False

Question 8

Two parties can mutually agree to rescind a contract only to the extent that it has been executed-otherwise, there is nothing to rescind.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Sam offers Tiffany $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.

Question 11

Don slips and falls on a patch of ice on Ella's property. Ella offers Don $10,000 if he promises not to pursue any slip-and-fall legal claim against her. Don agrees, but later discovers that it will cost $40,000 in medical expenses for a latent injury. In Don's suit against Ella, Don will most likely recover

Accepted Answer

A)  $30,000 to pay the costs over what Ella already paid Don. 
B)  nothing. 
C)  the estimated amount to pay the costs and any other liability. 
D)  the exact amount to pay the costs and no more.

Question 12

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

Accepted Answer

A)  recover the balance for lack of consideration. 
B)  recover the balance because the consideration was past. 
C)  recover the balance due to unforeseen events. 
D)  not recover the balance.

Question 13

Ethan is indebted to Finance Credit Corporation for $100,000. Ethan agrees to pay, and Finance Credit agrees to accept, a lesser amount than the creditor originally claimed was owed. This agreement is

Accepted Answer

A)  an accord. 
B)  a release. 
C)  a satisfaction. 
D)  an illusory promise.

Question 14

A promise made in return for an act or event that has already taken place is fully enforceable.

Accepted Answer

A) True 
 B)False

Question 15

Providing accounting services is "something of legally sufficient value."

Accepted Answer

A) True 
 B)False

Question 16

National Trucking Company begins transporting crude for Oil Inc. under a contract for a stated amount per load. After six months, National demands an increase in the stated amount because ordinary business expenses have increased. Oil's agreement to pay the increased amount is

Accepted Answer

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

Question 17

An illusory promise is a promise that is enforceable without consideration.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)  extinguishing the fire is the firefighters' preexisting duty. 
B)  extinguishing the fire represents past consideration. 
C)  extinguishing the fire is a foreseen difficulty. 
D)  the promise of a cash reward is illusory.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Risks ordinarily assumed in business constitute consideration for the modification of a contract.

Accepted Answer

A) True 
 B)False

Exam 12: Consideration

To be legally sufficient, consideration must be something of value in the eyes of the law.

Forfeiting a right to sue to recover further damages can constitute consideration.

Maria is the sheriff of Narez, Texas. Oscar robs a Narez gas station and a $500 reward is offered for his capture. When, later, Maria finds and arrests him, with respect to the reward, she can

Raj defends against a breach-of-contract suit by Student Loan Corporation by claiming that their deal-a student loan-was unfair because the consideration for the contract was inadequate. With respect to Raj's defense, the court will most likely rule in favor of the lender on the ground that Raj

Expo Center Inc. and Festival Music 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

When the doctrine of promissory estoppel is applied, the promisor is estopped, or barred, from performing the promise.

Two parties can mutually agree to rescind a contract only to the extent that it has been executed-otherwise, there is nothing to rescind.

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

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

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

Ethan is indebted to Finance Credit Corporation for $100,000. Ethan agrees to pay, and Finance Credit agrees to accept, a lesser amount than the creditor originally claimed was owed. This agreement is

A promise made in return for an act or event that has already taken place is fully enforceable.

Providing accounting services is "something of legally sufficient value."

National Trucking Company begins transporting crude for Oil Inc. under a contract for a stated amount per load. After six months, National demands an increase in the stated amount because ordinary business expenses have increased. Oil's agreement to pay the increased amount is

An illusory promise is a promise that is enforceable without consideration.

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

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

Risks ordinarily assumed in business constitute consideration for the modification of a contract.