Chapter 12: Consideration

Question 1

Consideration

Answer 1

Inducement to make a promise enforceable.

Question 2

Gratuitous promise

Answer 2

Promise made without consideration.

Question 3

Legal sufficiency

Answer 3

Benefit to the promisor or detriment to the promisee.

Question 4

Legal detriment

Answer 4

(1) doing an act that one is not legally obligated to do or;

(2) refraining from doing an act that one has a legal right to do

Question 5

Legal benefit

Answer 5

Obtaining some thing to which one has no legal right.

Question 6

Illusory promise

Answer 6

Promise imposing no obligation on the promisor.

Question 7

Output contract

Answer 7

Agreement to sell all of one’s production.

Question 8

Requirements contract

Answer 8

Agreement to buy all of one’s needs.

Question 9

Exclusive dealing

Answer 9

Sole right to sell goods in a defined market.

Question 10

Conditional promise

Answer 10

Obligations contingent upon a stated event.

Question 11

Pre-existing public obligations

Answer 11

Performance of public duties such as those imposed by tort or criminal law is neither a legal detriment or a legal benefit.

Question 12

Pre-existing contractual duty

Answer 12

Performance of a pre-existing contractual duty is not consideration.

Question 13

Modification of a pre-existing contract

Answer 13

Under the common law, a modification of a pre-existing contract must be supported by mutual consideration; under the Uniform Commercial Code a contract can be modified without new consideration.

Question 14

Substituted contract

Answer 14

Parties rescind their original contract and enter into a new contract.

Question 15

Settlement of an undisputed debt

Answer 15

Payment of a lesser sum of money to discharge an undisputed debt does not constitute legally sufficient consideration.

Question 16

Settlement of a disputed debt

Answer 16

Payment of a lesser sum of money to discharge a disputed debt is legally sufficient consideration. 

Question 17

Disputed debt

Answer 17

Obligation whose existence or amount is contested.

Question 18

Bargained-for exchange

Answer 18

Mutually agreed-upon exchange.

Question 19

Past consideration

Answer 19

Unbargained-for past events.

Question 20

Promise to pay debt barred by the statute of limitations

Answer 20

A new promise by the debtor to pay the debt renews the running of the statute of limitations for a second statutory period.

Question 21

Statute of limitations

Answer 21

Time period within which a lawsuit must be initiated.

Question 22

Promise to pay debt discharged in bankruptcy

Answer 22

May be enforceable without consideration

Question 23

Voidable promises

Answer 23

A new promise to perform a voidable obligation that has not been previously avoided is enforceable.

Question 24

Moral obligation

Answer 24

A promise made to satisfy a pre-existing moral obligation is generally unenforceable for lack of consideration.

Question 25

Promissory estoppel

Answer 25

Doctrine that prohibits a party from denying his promise when the promisee takes action or forbearance to his detriment reasonably based upon the promise.

Question 26

Promises under seal

Answer 26

Where is still recognized, the seal acts as a substitute for consideration.