Question 1

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

Question 2

Discuss the concept of adequacy of consideration.

Accepted Answer

Adequacy of consideration is not required where parties have freely agreed to the exchange. The items or actions that the parties agree to exchange do not need to have the same value. The requirement of legal sufficiency of consideration is not at all concerned with whether the bargain was good or bad or whether one party received disproportionately more or less than what he gave or promised in exchange. Courts will not invalidate a contract for absence of adequate consideration unless the purported consideration is clearly without any value. In such case, many courts would hold the transaction is a sham..

Question 3

Charitable subscriptions are one of the most frequently occurring applications of the doctrine of promissory estoppel.

Accepted Answer

A) True 
 B)False  True

Question 4

A bank robbery has occurred, and the banker's association has offered a $1,000 reward for information leading to the arrest and conviction of the robber. Several people are claiming to be entitled to the money. Which of them is eligible?

Accepted Answer

A)   The employees of the bank.
B)   An on-duty sheriff's deputy in the county where the arrest occurred.
C)   An off-duty deputy sheriff from a county other than the one where the arrest occurred.
D)   None of these are eligible.

Question 5

Which of the following is correct with regard to consideration?

Accepted Answer

A)   In a unilateral contract, a promise is exchanged for an act or forbearance to act.
B)   In a bilateral contract, there is an exchange of promises.
C)   Legal sufficiency is always related to adequacy of consideration.
D)   Two of these are correct.

Question 6

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. What is the result?

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 agreement for $4,000 is binding because of provisions of the UCC.
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 7

Andrew agreed to exchange something clearly without value to enter a contract with Milt. The contract will not fail for lack of consideration because, if the parties agree to the exchange, the courts will not be concerned about whether the consideration is "adequate."

Accepted Answer

A) True 
 B)False

Question 8

Sandy's private secretary promises not to disclose the contents of an email she typed if Sandy will give her the next day off with pay. If the secretary takes the day off, Sandy does not have to pay her for the day.

Accepted Answer

A) True 
 B)False

Question 9

If Marguarite promises to pay Neal $300 not to defame her, the promise is unenforceable because tort law imposes a preexisting obligation on Neal to refrain from such an act.

Accepted Answer

A) True 
 B)False

Question 10

The Restatement recognizes moral obligations as consideration.

Accepted Answer

A) True 
 B)False

Question 11

Define legal detriment.

Accepted Answer

The answer of Define legal detriment....

Question 12

In a contract for the sale of lawn care services, an issue arises about whether the homeowner would receive disproportionately less in service than the lawn care company would receive in compensation. This disparity may be relevant to the:

Accepted Answer

A)   requirement of legally sufficient consideration.
B)   availability of certain defenses and remedies.
C)   the voidability of the contract due to undue influence.
D)   All of these.

Question 13

Obligations contingent upon a stated event are known as conditional promises.

Accepted Answer

A) True 
 B)False

Question 14

Under the common law, in order to be enforceable, a modification of an existing contract must be supported by mutual consideration.

Accepted Answer

A) True 
 B)False

Question 15

An agreement to sell the entire production of a particular plant is a requirements contract.

Accepted Answer

A) True 
 B)False

Question 16

Bob promises to sell to Candy an automobile for $20,000, for which Candy promises $20,000. A unilateral contract exists.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Nathan entered a contract while he was seventeen. If, upon reaching the age of majority, he has not avoided the contract and promises to perform those contractual obligations, new consideration is required for the contract to be enforceable.

Accepted Answer

A) True 
 B)False

Question 19

A gratuitous promise is a promise made without consideration.

Accepted Answer

A) True 
 B)False

Question 20

Barbara, a wealthy widow, promises the pastor of her church that she will donate $30,000 to the church to help pay off its mortgage if the stewardship committee can obtain enough pledges for the balance of the $60,000 mortgage. Other pledges are obtained to pay off the mortgage, but now Barbara has changed her mind and plans to take an around-the-world cruise instead. In this case:

Accepted Answer

A)   Barbara's promise to pay $30,000 is enforceable because it was a promise made to satisfy a preexisting moral obligation.
B)   the promise to pay $30,000 is a promise to give a gift and is therefore not enforceable.
C)   under the Restatement of Contracts, Barbara's promise is enforceable.
D)   Two of these.

Exam 12: Consideration

Discuss the concept of adequacy of consideration.

Charitable subscriptions are one of the most frequently occurring applications of the doctrine of promissory estoppel.

A bank robbery has occurred, and the banker's association has offered a $1,000 reward for information leading to the arrest and conviction of the robber. Several people are claiming to be entitled to the money. Which of them is eligible?

Which of the following is correct with regard to consideration?

Andrew agreed to exchange something clearly without value to enter a contract with Milt. The contract will not fail for lack of consideration because, if the parties agree to the exchange, the courts will not be concerned about whether the consideration is "adequate."

Sandy's private secretary promises not to disclose the contents of an email she typed if Sandy will give her the next day off with pay. If the secretary takes the day off, Sandy does not have to pay her for the day.

If Marguarite promises to pay Neal $300 not to defame her, the promise is unenforceable because tort law imposes a preexisting obligation on Neal to refrain from such an act.

The Restatement recognizes moral obligations as consideration.

Define legal detriment.

In a contract for the sale of lawn care services, an issue arises about whether the homeowner would receive disproportionately less in service than the lawn care company would receive in compensation. This disparity may be relevant to the:

Obligations contingent upon a stated event are known as conditional promises.

Under the common law, in order to be enforceable, a modification of an existing contract must be supported by mutual consideration.

An agreement to sell the entire production of a particular plant is a requirements contract.

Bob promises to sell to Candy an automobile for $20,000, for which Candy promises $20,000. A unilateral contract exists.

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:

Nathan entered a contract while he was seventeen. If, upon reaching the age of majority, he has not avoided the contract and promises to perform those contractual obligations, new consideration is required for the contract to be enforceable.

A gratuitous promise is a promise made without consideration.