Question 1

The term "past consideration" is not really consideration at all because the law will not find a contract where there is no bargained-for-exchange.

Accepted Answer

A) True 
 B)False

Question 2

Mary agrees to sew Georgia's prom dress for $50 plus costs. Georgia decides that she wants ruffles around the neck and calls Mary who says it will now cost $60. When Mary finishes the dress (with ruffles), Georgia must pay:

Accepted Answer

A)  $50, since that is the original agreement. 
B)  $50, since a modification must be in writing. 
C)  $60, since the modified agreement is supported by additional consideration. 
D)  $60, since any subsequent agreement is enforceable.

Question 3

Wayne helped Hank study all night for an important exam. After Hank got an "A" on the exam, he told Wayne, "I will give you $10 for helping me get a good grade." Wayne said, "Thanks, I'll take it." There is:

Accepted Answer

A)  no contract because there is no mutual assent. 
B)  no contract because there is no valid consideration. 
C)  no contract because $10 is reasonably inadequate consideration. 
D)  a contract with sufficient consideration.

Question 4

Alice says to Brian, "If I decide to buy a word processor next year, I will buy it from you." This is an example of:

Accepted Answer

A)  an illusory promise. 
B)  past consideration. 
C)  the pre-existing duty rule. 
D)  good consideration.

Question 5

In a bilateral contract, if one party is not bound, neither party is bound.

Accepted Answer

A) True 
 B)False

Question 6

Stan purchased 400 pairs of gloves from Isaac at a contract price of $800. Fifty of the gloves were defective, and a dispute arose as to the amount due and owing under the contract. Stan refuses to pay the $800, and Isaac is threatening to sue. Which of the following is correct with regard to this transaction?

Accepted Answer

A)  If Isaac agrees to accept $600 to settle the dispute and Stan agrees to pay that amount, the substitute agreement is enforceable. 
B)  If Isaac agrees to accept $600 to settle the dispute and Stan pays that amount, Isaac can still sue for the balance of $200 and will win the lawsuit. 
C)  Stan is under a pre-existing legal obligation to pay the $800. 
D)  Stan must return the defective gloves to Isaac, who must replace them. Then, Stan must pay the $800.

Question 7

In most, if not all, cases where there is a legal detriment to the promisee, there is also a legal benefit to the promisor.

Accepted Answer

A) True 
 B)False

Question 8

William agrees to drill a well up to 200 feet deep for John's rural cabin. The contract price is $3,000. After drilling 100 feet, William strikes solid granite rock. He talks to John and explains that this is highly unusual for the area and could not have been anticipated at the time of entering into the contract. He offers to get a special drill, but says it will cost him more money, so that he will be unable to complete the project for the agreed price. Because John is anxious to have the well, he agrees to pay William an additional $1,000 to complete the job. However, once the well is finished, he changes his mind and now says he will pay only the originally agreed-upon amount. In this case:

Accepted Answer

A)  the parties have agreed to a substitute contract which discharges the original contract. John is obligated to pay the additional $1,000. 
B)  the substitute contract is binding under the UCC because there is the payment of additional money. 
C)  William is in breach of contract. John need not pay any additional money. 
D)  William is under a pre-existing moral duty to perform at the originally agreed-upon price.

Question 9

Past actions unbargained for by the parties in an agreement can become valid consideration for a contract.

Accepted Answer

A) True 
 B)False

Question 10

Consideration can be present regardless of whether the parties intend an exchange.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements is most accurate concerning charitable subscription promises?

Accepted Answer

A)  They are generally not enforceable. 
B)  The courts equate them with gifts. 
C)  They are generally enforceable if there is reliance by the charity. 
D)  The Restatement uses a strict reliance requirement in relation to charitable subscriptions.

Question 12

Fran negligently drove her truck through Nick's fence, causing damage. If she promises to pay Nick $1,500 if he does not bring a lawsuit against her, Nick accepts and forms a unilateral contract by not filing suit. His forbearance is consideration.

Accepted Answer

A) True 
 B)False

Question 13

Define consideration.

Accepted Answer

The answer of Define consideration....

Question 14

Darla offers to pay Edward $6,000 for Edward's car, provided that Darla receives that much from her uncle's estate, which is currently being probated. She expects to know for sure how much she will receive within a week or so. In this case:

Accepted Answer

A)  this is an illusory contract, because Darla doesn't know whether she will receive the money for sure. 
B)  the consideration of the promise of $6,000 is insufficient because it is subject to a condition. 
C)  Darla's conditional promise is sufficient consideration unless Darla knows she cannot receive at least $6,000 from her uncle's estate. 
D)  There is no consideration.

Question 15

Doug obtains an exclusive franchise to sell widgets for the Acme Widget Company. The exclusive franchise covers the entire State of Wisconsin for a period of three years. In this case:

Accepted Answer

A)  Acme is obligated to use its best efforts to supply the goods only if this clause appears in the written franchise agreement. 
B)  according to the UCC, unless otherwise agreed, Doug must use his best efforts to promote the sale of the widgets in his territory. 
C)  under the UCC, such an agreement lacks consideration. 
D)  consideration is not required because this is a moral obligation.

Question 16

The Code has changed the common law rule regarding modification of a preexisting contract by providing that a contract for the sale of goods can be effectively modified by the parties without new consideration, provided they intend to do so and act in good faith.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following gratuitous promises is/are enforceable by statute?

Accepted Answer

A)  A good-faith contract modification in a contract for the sale of goods 
B)  A written offer signed by a merchant to buy or sell goods that assures it will be kept open for one month 
C)  A renunciation of a claim in a written waiver that is signed and delivered by the aggrieved party when the contract involves a sale of goods 
D)  All of these are enforceable by statute.

Question 18

Define legal detriment.

Accepted Answer

The answer of Define legal detriment....

Question 19

Sue owes $5,000 to the First National Bank for a student loan which will come due on January 1 next year. She has been offered a two-year graduate fellowship, but she will not be able to pay the loan back if she accepts the fellowship. The bank manager tells Sue that if she pays $3,000 now, they will forgive the loan. Should Sue accept the offer?

Accepted Answer

A)  No, because the bank can still sue for the remaining $2,000 
B)  No, because the manager's promise is not binding on the bank 
C)  Yes, because the early payment of the loan is consideration that makes the bank's promise binding 
D)  Yes, because the bank must do whatever the manager says

Question 20

A conditional promise is a promise the performance of which depends upon the happening or nonhappening of an event not certain to occur.

Accepted Answer

A) True 
 B)False

Exam 12: Consideration

The term "past consideration" is not really consideration at all because the law will not find a contract where there is no bargained-for-exchange.

Mary agrees to sew Georgia's prom dress for $50 plus costs. Georgia decides that she wants ruffles around the neck and calls Mary who says it will now cost $60. When Mary finishes the dress (with ruffles) , Georgia must pay:

Wayne helped Hank study all night for an important exam. After Hank got an "A" on the exam, he told Wayne, "I will give you $10 for helping me get a good grade." Wayne said, "Thanks, I'll take it." There is:

Alice says to Brian, "If I decide to buy a word processor next year, I will buy it from you." This is an example of:

In a bilateral contract, if one party is not bound, neither party is bound.

In most, if not all, cases where there is a legal detriment to the promisee, there is also a legal benefit to the promisor.

Past actions unbargained for by the parties in an agreement can become valid consideration for a contract.

Consideration can be present regardless of whether the parties intend an exchange.

Which of the following statements is most accurate concerning charitable subscription promises?

Fran negligently drove her truck through Nick's fence, causing damage. If she promises to pay Nick $1,500 if he does not bring a lawsuit against her, Nick accepts and forms a unilateral contract by not filing suit. His forbearance is consideration.

Define consideration.

Darla offers to pay Edward $6,000 for Edward's car, provided that Darla receives that much from her uncle's estate, which is currently being probated. She expects to know for sure how much she will receive within a week or so. In this case:

Doug obtains an exclusive franchise to sell widgets for the Acme Widget Company. The exclusive franchise covers the entire State of Wisconsin for a period of three years. In this case:

The Code has changed the common law rule regarding modification of a preexisting contract by providing that a contract for the sale of goods can be effectively modified by the parties without new consideration, provided they intend to do so and act in good faith.

Which of the following gratuitous promises is/are enforceable by statute?

Define legal detriment.

A conditional promise is a promise the performance of which depends upon the happening or nonhappening of an event not certain to occur.