Simulation Multiple Choice Questions Flashcards
Category-Legal Test for Consideration
A business owner promises to pay an employee a bonus at the end of the year for continuing to work for the company. The employee continues to work but does not receive the bonus.
Is the promise enforceable?
A. Yes, because the employee provided consideration by continuing to work.
B. No, because the employee was already obligated to work.
C. Yes, because the business owner received a benefit.
D. No, because the promise was a gift.
Correct Response: No, because the employee was already obligated to work.
Rationale: The promise is NOT enforceable because the employee’s continued work does not constitute consideration. The employee was already under contract to work, so continuing to do so does not provide additional legal value to the employer.
Category- Expectation Damages
A company contracts with a supplier for the delivery of materials needed to manufacture its products. The supplier fails to deliver on time, causing the company to miss its product launch date and lose profits.
What are the company’s entitlements under Expectation Damages?
A. Refund of the payment made to the supplier.
B. Damages equal to the cost of obtaining the materials from another supplier.
C. Damages equal to the lost profits due to the missed product launch.
The Correct Response: Damages equal to the lost profits due to the missed product launch.
Rationale: Expectation Damages aim to put the injured party in the position they would have been in if the contract had been fulfilled, which includes compensation for lost profits due to the breach.
Category-Past Consideration
A hospital administrator promises a doctor a significant bonus for the successful completion of a challenging surgery that was performed two years ago. The surgery had a profound impact on the hospital’s reputation.
Is the promise of the bonus enforceable?
A. It is enforceable because the surgery improved the hospital’s reputation.
B. It is enforceable because the doctor might perform more surgeries in the future.
C. It is not enforceable because the surgery is considered past consideration.
D. It is enforceable because the hospital wants to reward the doctor.
Correct Response: It is NOT enforceable because the surgery is considered past consideration.
Rationale: A promise made for actions that have already been completed and were not agreed upon as part of a future reward at the time they were performed, is not considered “valid consideration” for a new promise.
Category- Insufficient Illusory Promise
A client tells a graphic designer, “Create a logo for us, and if we really like it, we might use you for all our future design work.” The designer creates the logo, but the client decides not to use them for future work.
Is the designer entitled to future work?
A. Yes, because they created the logo.
B. No, because the client’s promise was illusory.
C. Yes, because creating the logo is a form of consideration.
D. No, because “all” design work is vague.
Correct Response: No, because the client’s promise was illusory.
Rationale: The promise of potential future work was not a definite commitment and depended on the client’s subjective satisfaction.
Category- Promissory Estoppel
A restaurant owner tells a local farmer that the restaurant wants to support local and organic produce. The farmer obtains a special organic certification at a significant expense, but the restaurant owner purchases produce from a different supplier.
In this scenario, which key element for a promissory estoppel claim is missing?
A. Unilateral
B. Objective
C. Reliance
D. Promise
Correct Response: Promise
Category- Dispositive Facts (non-course)
A business contracts a web developer to create a website with specific features by a certain date. The website is delivered on time but lacks several agreed features.
Which of the following facts is legally dispositive in determining if the business can seek remedies for breach of contract?
A. The website was delivered on time.
B. The web developer promised to add the missing features later.
C. The website lacks several agreed-upon features.
D. The business has already paid for the website in full.
Correct Response: The website lacks several agreed-upon features.
Rationale: The website lacking several agreed-upon features is legally dispositive because it indicates non-compliance with the contract’s terms regarding the product’s specifications.
Category- Issue (non-course)
A business owner and a supplier verbally agree on a bulk purchase of materials at a set price. After delivery, the supplier demands a higher price than initially agreed upon.
What is the primary issue at hand?
A. Whether the supplier can legally demand a higher price post-delivery.
B. The legality of verbal agreements in bulk purchases.
C. The quality of the materials supplied.
D. The delivery timeframe of the materials.
Correct Response: Whether the supplier can legally demand a higher price post-delivery.
Rationale: The main issue revolves around the enforceability of verbal agreements and whether a supplier can alter the terms, specifically the price, after fulfilling their part of the agreement.
Category- Conclusion (Holding) (non-course)
A business agrees to sell 100 units of a product to a buyer at a set price. After the agreement, but before delivery, the market price of the product significantly increases. The seller then refuses to deliver unless the buyer agrees to a higher price.
What is the most likely legal conclusion?
A. The buyer must agree to a higher price.
B. The seller can unilaterally cancel the contract.
C. The contract is void due to market fluctuations.
D. The seller is obligated to fulfill the original agreement.
Correct Response: The seller is obligated to fulfill the original agreement.
Rationale: Once a contract is formed, parties are bound to their obligations unless the contract allows adjustments based on market conditions. Unilateral changes or cancellations are generally not permitted without breach consequences.
Category- Gratuitous Promise
A club member is promised a special edition club jersey by the club president if the club member can attend all club meetings for a year. The member attends all meetings, but the President decides not to give the jersey.
Is the president’s promise enforceable?
A. No, because the promise was a gratuitous promise and lacks consideration.
B. Yes, because the member attended all meetings.
C. Yes, because the club benefitted from the member’s consistent attendance.
D. No, because attending meetings was not a direct benefit to the president.
Correct Response: No, because the promise was a gratuitous promise and lacks consideration.
Rationale: The promise is not enforceable because it was a gratuitous promise, lacking the necessary consideration to form a contract.
A company sends a proposal to a cleaning service stating, “This contract will be considered accepted once the cleaning of the office premises begins.” The cleaning service starts cleaning the office the next day.
According to the Objective Theory of Contracts, this action represents:
A. A formal acceptance through written communication.
B. Acceptance by performance as the cleaning service began the work.
C. A rejection of the offer due to the lack of formal acceptance.
D. A counteroffer by starting the work without a formal agreement.
Correct Response: Acceptance by performance as the cleaning service began the work.
Rationale: The commencement of the cleaning as specified in the proposal constitutes acceptance by performance, aligning with the principles of Objective Theory.
