Chapter 13 Book set

Question 1

If a party is already bound by contract to perform a certain duty, that duty can serve as consideration for a second contract.

Answer 1

False

Question 2

Providing accounting services is “something of legally sufficient value.”

Answer 2

True

Question 3

Key promises to pay Liv, his niece, $5,000 if she obtains her degree at Metro College, where she is in her third year. Liv graduates. Key must pay because

Answer 3

Liv obtained a degree at Metro

Question 4

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

Answer 4

False

Question 5

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

Answer 5

True

Question 6

With respect to consideration, the application of the rule regarding preexisting duty is meant to prevent extortion.

Answer 6

True

Question 7

The elements of consideration, in a bilateral contract for a sale of goods, are the sale and the goods.

Answer 7

False

Question 8

EcoEnergy LLC files a suit against Fiber Optics Inc., claiming that the consideration for their contract is inadequate—that the plaintiff will not realize sufficient financial benefit from the deal to make it worthwhile. Most likely, the court will

Answer 8

not question the adequacy of consideration

Question 9

A promise to do something that one has no prior legal duty to do is not legally sufficient consideration.

Answer 9

False

Question 10

Rory questions whether there is consideration for his contract with Silver Spurs Club to exchange his performance of country music on certain dates for Silver’s payment of a certain amount. To constitute consideration, the value of whatever is exchanged must be

Answer 10

legally sufficient

Question 11

Kim promises to pay Leo $500 to install a sump pump in Kim’s warehouse. Leo completes the installation. The act of installing the pump

Answer 11

is the consideration that creates Kim’s obligation to pay Leo

Question 12

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

Answer 12

the adequacy of the consideration is not for the court to determine

Question 13

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

Answer 13

not collect it because she had a preexisting duty to capture Oscar

Question 14

Fritz offers to buy a guitar owned by Holle for twice what she paid for it. She accepts and hands the guitar to Fritz. Holle’s delivery of the guitar is

Answer 14

consideration

Question 15

A preexisting duty may be imposed by law.

Answer 15

True

Question 16

Exceptions to the preexisting duty rule include rescission.

Answer 16

True

Question 17

Painting a garage can constitute “something of legally sufficient value

Answer 17

True

Question 18

Sports Bar and Tasty Tacos are adjacent businesses with adjoining parking lots. Sports Bar offers Tasty a discount on purchases if the restaurant will not tow the cars of Sports Bar’s patrons who park in the restaurant’s lot. The discount is legally sufficient consideration

Answer 18

because it is a promise of something of value

Question 19

Consideration refers to one party’s assessment of the other party to a contract.

Answer 19

False

Question 20

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

Answer 20

False

Question 21

Adequacy of consideration refers to “how much” consideration is given.

Answer 21

True

Question 22

Kris buys Liz’s house for $300,000, which is the fair market value of the house. If the contract is later disputed in court, the court is likely to declare Kris’s consideration

Answer 22

legally sufficient.

Question 23

To enforce a contractual promise, there must be an exchange of consideration underlying the bargain.

Answer 23

True

Question 24

To apply the doctrine of promissory estoppel in a given situation, there must exist no clear or definite promise.

Answer 24

False

Question 25

In general, courts question the adequacy of consideration.

Answer 25

False

Question 26

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

Answer 26

True

Question 27

A promise is illusory when its performance depends solely on the discretion of the promisor.

Answer 27

True

Question 28

Adequacy of consideration refers to

Answer 28

“how much” consideration is given

Question 29

If a debt is liquidated, an accord and satisfaction cannot take place.

Answer 29

True

Question 30

A promise to pay a previous debt barred by a statute of limitations can be enforced without consideration.

Answer 30

True

Question 31

Consideration must provide the basis for the bargain struck between contracting parties.

Answer 31

True

Question 32

A preexisting duty may arise out of a previous contract.

Answer 32

True

Question 33

Shockingly inadequate consideration can indicate fraud in a contract.

Answer 33

True

Question 34

A release enables recovery beyond that specified in its terms.

Answer 34

False

Question 35

To pay on receipt of certain goods is “something of legally sufficient value.”

Answer 35

True

Question 36

Situations in which agreements lack consideration include those involving a preexisting duty.

Answer 36

True

Question 37

Consideration is the value given in return for a promise or in return or a performance.

Answer 37

True

Question 38

An accord and satisfaction is an agreement in which one party gives up the right to pursue a legal claim against another party.

Answer 38

False

Question 39

Jen promises to pay Kam $500 because “she does not have as much money as other people.” Jen’s promise is

Answer 39

not enforceable because Kam has not given consideration in return

Question 40

Normally, a court will evaluate the adequacy of consideration based solely on the comparative value of the things exchanged as part of agreement.

Answer 40

False

Question 41

To constitute consideration, there must be

Answer 41

a bargained-for exchange

Question 42

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

Answer 42

not question the adequacy of the consideration.

Question 43

Exceptions to the preexisting duty rule include unforeseen difficulties

Answer 43

True

Question 44

An option to cancel the performance of a contract before it begins does not make the promise illusory.

Answer 44

False

Question 45

The performance of an action that one is not otherwise obligated to undertake is not legally sufficient consideration.

Answer 45

False

Question 46

Consideration refers to the objective determination of how much a bargain is worth.

Answer 46

False

Question 47

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

Answer 47

True

Question 48

Under a contract with Soy Farms, Tai begins grading a terraced hillside for planting. Halfway through the project, Tai asks for $5,000 over the contract price, claiming an increase in the “cost of doing business.” The farm agrees but later refuses to pay. The agreement to pay more is

Answer 48

unenforceable because Tai’s performance was a preexisting duty

Question 49

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

Answer 49

because Bob has a legal right to restrict the use of his tables

Question 50

With respect to consideration, a bargained-for exchange refers to the location, such as a stock exchange, where the contracting parties negotiated their deal.

Answer 50

False