Question 1

Which of the following is true regarding the preexisting duty rule?

Accepted Answer

A)   Unforeseen circumstances are an exception, but additional work and past consideration are not exceptions.
B)   Additional work is an exception, but unforeseen circumstances and past consideration are not exceptions.
C)   Past consideration is an exception, but unforeseen circumstances and additional work are not exceptions.
D)   Unforeseen circumstances and additional work are exceptions, but past consideration is not an exception.
E)   Unforeseen circumstances and past consideration are exceptions, but additional work is not an exception.F) C) and E)
G) B) and D)

Question 2

John and Sheridan enter into a contract whereas Sheridan hires John to cater her wedding for $15 a plate per person. On the day of her wedding, John decides that he wants more money and calls Sheridan and tells her that to cater her wedding, he now wants $20 a plate per person. Desperate, Sheridan agrees. Does Sheridan now owe the $20 a plate? Explain.

Accepted Answer

The performance of a duty one is obligat...

Question 3

Reasonable reliance on a promise is the only requirement for promissory estoppel to apply.

Accepted Answer

A) True 
 B)False

Question 4

Upon graduating from college, Anum receives a job offer across the country and moves there, giving up her apartment and cancelling all her other job interviews in the process. After she arrives, she is informed that there is no job. In most states, what may she recover?

Accepted Answer

A)   Nothing
B)   Reliance damages
C)   Liquidated damages
D)   Acknowledged damages
E)   Approved damagesF) A) and E)
G) A) and D)

Question 5

[Bank Robbery] Safe Bank was robbed of a significant sum of cash by a robber later identified as Victor Victory. Safe Bank offered a reward of $10,000 to anyone who captured or provided information leading to the capture of Victor. Kareem, a police officer in town, promised Safe Bank officials that he would apprehend Victor. While on duty, Kareem arrested Victor at a restaurant in town. He found Victor after Ursula, Victor's girlfriend, told Kareem about various places Victor enjoyed eating. The bank refuses to pay either Ursula or Kareem any of the reward money.
-Which of the following is true regarding the offer of the reward?

Accepted Answer

A)   It pertained to a bilateral contract that could be accepted only with consideration consisting of a promise.
B)   It pertained to a bilateral contract that could be accepted only with consideration consisting of performance.
C)   It pertained to a bilateral contract that could be accepted with consideration consisting of a promise or performance.
D)   It pertained to a unilateral contract that could be accepted with consideration consisting of a promise.
E)   It pertained to a unilateral contract that could be accepted with consideration consisting of performance.F) C) and D)
G) B) and E)

Question 6

Haruki's boss, Gabriel, tells him that because he has been such a valuable employee, he will receive an extra week of vacation. When Haruki decides to schedule the vacation, he reminds Gabriel of his statement. Gabriel says that he has changed his mind and that he really cannot afford to let Haruki have an extra week off. Haruki says that Gabriel has breached the contract he had with him for an extra vacation week. Assuming injustice cannot be established, who is right? Does a valid contract for an extra vacation week exist?

Accepted Answer

Gabriel is not required to all...

Question 7

Which of the following was involved when the government, in attempting to help AIG, agreed to lend AIG up to $85 billion in exchange for nearly 80 percent of AIG's stock?

Accepted Answer

A)   An accord and satisfaction
B)   An accord but not a satisfaction
C)   A unilateral contract
D)   A bilateral contract
E)   An unliquidated contractF) A) and D)
G) B) and E)

Question 8

In return for his oral promise to pay her $100, Emma promises her uncle that she will not violate laws against speeding for one year. Emma abides by her promise, but her uncle refuses to pay. Which of the following is true regarding whether Emma is entitled to the money?

Accepted Answer

A)   Emma is entitled to the money because she upheld her part of the bargain.
B)   Emma is not entitled to recover because she had a preexisting duty to obey laws against speeding.
C)   Emma is not entitled to recover because obeying traffic laws was actually good for her, not something that would constitute a detriment.
D)   Emma is not entitled to recover unless the agreement was put under seal.
E)   Emma is entitled to recover, but only ½ of the amount, because a family member is involved and the agreement was not in writing.F) B) and D)
G) B) and E)

Question 9

[Garage Sale] While cleaning out his garage, Ezra offers to sell Mia a used computer for $200. Mia replies, "I'll think about it and buy it if I decide to do so." Ezra also calls Irina and offers to sell Irina a used business law book for $50. She asks if she can clean his apartment in exchange for the book, instead of paying cash, and he agrees. Ezra also agrees to sell a communications book for $5 to Tam, who promises to pick it up the next day. Meanwhile, Diego comes to visit and offers Ezra $45 for the business law book. Ezra sells it to him because he decides his apartment is clean enough. Diego also offers Ezra $50 for the used computer. Ezra sells it to Diego because he does not expect to hear from Mia. Diego sees the communications book and offers Ezra $45 for it. Ezra decides to forget about Tam and proceeds to sell the book to Diego for $45. The next day Irina shows up to clean Ezra's apartment and is very angry because Ezra did not save the book for her. Irina claims that Ezra breached their contract because they had a deal. Ezra says that they never had a deal because no consideration was present. He also says that even if cleaning house would be considered consideration, any housekeeping done would have been wholly inadequate to support receipt of the book because his house was already clean. Tam is also angry because Ezra sold the communications book, and informs him that he breached the contract he had with her. Ezra tells her that he had no obligation to hold the book for her because they had a unilateral contract. Two days after they first spoke, Mia tells Ezra that she would like the computer. She tells him that her response bound him and that he should have awaited her action. Ezra tells Diego that he needs to return everything for a full refund. Diego refuses.
-Which of the following is true regarding Tam's claim that by selling the communications book to Diego for a higher price, Ezra breached the contract he had with her?

Accepted Answer

A)   Tam is correct.
B)   Tam is correct only if she can establish that she had prior dealings with Ezra.
C)   Tam is correct only if she can establish that she had provided past consideration in addition to the amount she agreed to pay for the book.
D)   Tam is incorrect because her acceptance was illusory.
E)   Tam is incorrect because the amount she agreed to pay was significantly less than the fair market value of the book and, therefore, did not amount to consideration.F) B) and D)
G) B) and E)

Question 10

Consideration is optional in every unilateral contract.

Accepted Answer

A) True 
 B)False

Question 11

[Garage Sale] While cleaning out his garage, Ezra offers to sell Mia a used computer for $200. Mia replies, "I'll think about it and buy it if I decide to do so." Ezra also calls Irina and offers to sell Irina a used business law book for $50. She asks if she can clean his apartment in exchange for the book, instead of paying cash, and he agrees. Ezra also agrees to sell a communications book for $5 to Tam, who promises to pick it up the next day. Meanwhile, Diego comes to visit and offers Ezra $45 for the business law book. Ezra sells it to him because he decides his apartment is clean enough. Diego also offers Ezra $50 for the used computer. Ezra sells it to Diego because he does not expect to hear from Mia. Diego sees the communications book and offers Ezra $45 for it. Ezra decides to forget about Tam and proceeds to sell the book to Diego for $45. The next day Irina shows up to clean Ezra's apartment and is very angry because Ezra did not save the book for her. Irina claims that Ezra breached their contract because they had a deal. Ezra says that they never had a deal because no consideration was present. He also says that even if cleaning house would be considered consideration, any housekeeping done would have been wholly inadequate to support receipt of the book because his house was already clean. Tam is also angry because Ezra sold the communications book, and informs him that he breached the contract he had with her. Ezra tells her that he had no obligation to hold the book for her because they had a unilateral contract. Two days after they first spoke, Mia tells Ezra that she would like the computer. She tells him that her response bound him and that he should have awaited her action. Ezra tells Diego that he needs to return everything for a full refund. Diego refuses.
-Which of the following is true regarding Ezra's claim concerning the inadequacy of house cleaning as consideration?

Accepted Answer

A)   Ezra is correct because cleaning house would not constitute a benefit to the promisor.
B)   Ezra is correct because cleaning house would not constitute a detriment to the promisee.
C)   Ezra is correct because Irina had only promised, but had not actually performed.
D)   Although, contrary to Ezra's assertion, house cleaning can be consideration, it was not in this case, as his apartment was already fairly clean.
E)   Ezra is incorrect because house cleaning can constitute consideration that would support a contract, and the court would not likely be concerned with the fact that the cleaning duties would be light.F) A) and C)
G) A) and B)

Question 12

[Debt Trouble] Isabella has significant credit card debt following a semester abroad in Italy. Her tuition and living expenses had ended up costing more than she had anticipated. Isabella recently took a business law class and thought that she might be able to find a way out of her troubles. She owed $2,000 to Credit Card Company A and $3,000 to Credit Card Company B. She also owed $2,000 to the local Italian university for tuition and book expenses. Isabella is in negotiations with the university over the amount owed because one of the classes she had originally enrolled in was cancelled halfway through the semester. While the cancellation of that class did not significantly affect her academic career, Isabella thought that she should get at least some deduction on the overall tuition bill. Isabella called Credit Card Company A and told them that she was a student and could not afford to pay the entire $3,000 she owed. The representative of Credit Card Company A, who was working her last day, told Isabella just to pay $50, and that would be considered payment in full. The representative sent Isabella an e-mail to that effect. Isabella was very pleased and immediately quit her job at the campus bookstore, believing that with the reduction from Credit Card Company A, she would have a sufficient amount of extra money. Isabella then called Credit Card Company B and once again pled her case as a student. She talked Credit Card Company B into taking a used car with a blown-up engine worth around $1,000 in exchange for the debt. Transfer details regarding the car were worked out through e-mail. Finally, Isabella sent the university a check for $1,000 marked "paid in full." Much to her surprise and pleasure, the university did indeed cash the check. Isabella, however, was distraught to find that within 30 days, Credit Card Company A sent her a bill for $1,950, Credit Card Company B sent her a bill for $3,000, and the university sent her a check for $1,000 along with a bill for $2,000. Faced with all these claims, Isabella decided to look for work, and ended up finding work she enjoyed as a translator. Assume all credit card company representatives had authority to make the agreements at issue.
-What is Isabella's best argument in attempting to avoid obligations to Credit Card Company A?

Accepted Answer

A)   That she reasonably relied to her detriment and that she should be able to enforce the company's promise under a theory of promissory estoppel.
B)   That her promise did indeed constitute consideration because of the theory of moral consideration, and Credit Card Company A clearly expressed its concern with student debt.
C)   That her promise did indeed constitute consideration because it allowed Credit Card Company A to report forgiveness of debt rather than default on its financial reports.
D)   That because of unforeseen circumstances, she should be able to avoid the debt.
E)   That the debt became illusory based on the promise made by Credit Card Company A.F) B) and C)
G) None of the above

Question 13

[Debt Trouble] Isabella has significant credit card debt following a semester abroad in Italy. Her tuition and living expenses had ended up costing more than she had anticipated. Isabella recently took a business law class and thought that she might be able to find a way out of her troubles. She owed $2,000 to Credit Card Company A and $3,000 to Credit Card Company B. She also owed $2,000 to the local Italian university for tuition and book expenses. Isabella is in negotiations with the university over the amount owed because one of the classes she had originally enrolled in was cancelled halfway through the semester. While the cancellation of that class did not significantly affect her academic career, Isabella thought that she should get at least some deduction on the overall tuition bill. Isabella called Credit Card Company A and told them that she was a student and could not afford to pay the entire $3,000 she owed. The representative of Credit Card Company A, who was working her last day, told Isabella just to pay $50, and that would be considered payment in full. The representative sent Isabella an e-mail to that effect. Isabella was very pleased and immediately quit her job at the campus bookstore, believing that with the reduction from Credit Card Company A, she would have a sufficient amount of extra money. Isabella then called Credit Card Company B and once again pled her case as a student. She talked Credit Card Company B into taking a used car with a blown-up engine worth around $1,000 in exchange for the debt. Transfer details regarding the car were worked out through e-mail. Finally, Isabella sent the university a check for $1,000 marked "paid in full." Much to her surprise and pleasure, the university did indeed cash the check. Isabella, however, was distraught to find that within 30 days, Credit Card Company A sent her a bill for $1,950, Credit Card Company B sent her a bill for $3,000, and the university sent her a check for $1,000 along with a bill for $2,000. Faced with all these claims, Isabella decided to look for work, and ended up finding work she enjoyed as a translator. Assume all credit card company representatives had authority to make the agreements at issue.
-Which of the following would be the result in a majority of states in regard to Isabella's obligation to the Italian university?

Accepted Answer

A)   That because the debt was unliquidated and the university cashed the check, an accord and satisfaction occurred, and Isabela owes nothing.
B)   That because the debt was liquidated, no accord and satisfaction occurred, and Isabella owes the full $2,000.
C)   That in order to satisfy equitable principles, the parties would split the remaining debt with Isabella owing $1,000.
D)   That under the UCC, Isabella would be required to pay the full amount, but the university would be estopped from charging any interest.
E)   That because the university offered, through issuance of the check, full repayment, no accord and satisfaction existed; Isabella owes the full $2,000.F) A) and B)
G) B) and E)

Question 14

Which of the following is an example of a situation where the court will consider adequacy of consideration?

Accepted Answer

A)   When someone purchases a TV for $500 and later discovers it is worth less than $100.
B)   When someone purchases a car which is later subject to a manufacturer recall.
C)   When someone purchases a house and discovers later that property values in the neighborhood are falling.
D)   When someone divests himself of all his assets for a very small amount of money and then declares bankruptcy.
E)   The court never considers adequacy of consideration.F) None of the above
G) B) and D)

Question 15

Which of the following was the result on appeal in Thelma Agnes Smith v. David Phillip Riley, the case in the text in which the plaintiff who had lived with the defendant out of wedlock for several years sought to enforce two agreements regarding the sale and assignment of property to her after the couple broke up?

Accepted Answer

A)   The court ruled in favor of the defendant on the basis that a recitation of nominal consideration of $1 along with love and affection was insufficient consideration to support a conveyance.
B)   The court ruled in favor of the plaintiff on the basis that a recitation of nominal consideration of $1 along with consideration of love and affection was adequate consideration to support the agreements.
C)   The court ruled in favor of the defendant on the basis that the plaintiff's previous deposit of funds into a joint checking account was insufficient consideration for the later agreements.
D)   The court ruled in favor of the plaintiff on the basis that the plaintiff's previous deposit of funds into a joint checking account was sufficient consideration for the later agreements.
E)   The court ordered the parties to divide on a 50/50 basis the assets in question based on their domestic partnership.F) B) and C)
G) A) and B)

Question 16

When a debt is liquidated, the parties may enter into an accord and satisfaction.

Accepted Answer

A) True 
 B)False

Question 17

Which statement is true regarding the adequacy of consideration?

Accepted Answer

A)   Courts generally consider the adequacy of consideration in determining whether to enforce a contract.
B)   Courts consider the adequacy of consideration only if something is sold for less than 90% of its market value.
C)   Courts consider the adequacy of consideration only if something is sold for less than 80% of its market value.
D)   Courts consider the adequacy of consideration only if something is sold for less than 70% of its market value.
E)   Courts seldom consider the adequacy of consideration but will do so if fraud is involved.F) A) and D)
G) All of the above

Question 18

Which of the following is an exception to the rule requiring consideration?

Accepted Answer

A)   Promissory agreement
B)   Promissory estoppel
C)   Quasi estoppel
D)   Quasi agreement
E)   Promissory performanceF) A) and B)
G) B) and D)

Question 19

[Garage Sale] While cleaning out his garage, Ezra offers to sell Mia a used computer for $200. Mia replies, "I'll think about it and buy it if I decide to do so." Ezra also calls Irina and offers to sell Irina a used business law book for $50. She asks if she can clean his apartment in exchange for the book, instead of paying cash, and he agrees. Ezra also agrees to sell a communications book for $5 to Tam, who promises to pick it up the next day. Meanwhile, Diego comes to visit and offers Ezra $45 for the business law book. Ezra sells it to him because he decides his apartment is clean enough. Diego also offers Ezra $50 for the used computer. Ezra sells it to Diego because he does not expect to hear from Mia. Diego sees the communications book and offers Ezra $45 for it. Ezra decides to forget about Tam and proceeds to sell the book to Diego for $45. The next day Irina shows up to clean Ezra's apartment and is very angry because Ezra did not save the book for her. Irina claims that Ezra breached their contract because they had a deal. Ezra says that they never had a deal because no consideration was present. He also says that even if cleaning house would be considered consideration, any housekeeping done would have been wholly inadequate to support receipt of the book because his house was already clean. Tam is also angry because Ezra sold the communications book, and informs him that he breached the contract he had with her. Ezra tells her that he had no obligation to hold the book for her because they had a unilateral contract. Two days after they first spoke, Mia tells Ezra that she would like the computer. She tells him that her response bound him and that he should have awaited her action. Ezra tells Diego that he needs to return everything for a full refund. Diego refuses.
-Which of the following is true regarding the dispute between Ezra and Diego regarding whether Diego must return anything?

Accepted Answer

A)   Diego must return only the computer.
B)   Diego must return only the business law book.
C)   Diego must return only the communications book.
D)   Diego must return the computer, the business law book, and the communications book.
E)   Diego does not legally have to return anything.F) A) and B)
G) A) and C)

Question 20

[Car Trouble] Jennifer wants to sell her car and Timmy agrees to purchase it. Jennifer and Timmy become involved in an over-the-phone negotiation and settle on a price of $1,000. Jennifer lives three hours from Timmy but agrees to deliver the car to him in his home state and take the bus back, provided Timmy promises to purchase the vehicle. She drives three hours. Upon arrival, Timmy says he will not purchase the vehicle unless Jennifer agrees to go to the dealer, get a second set of $500 SmartKeys, and mail the keys to Timmy within three weeks. Having driven all that way, Jennifer agrees. Timmy gives Jennifer the $1,000, using money he borrowed from Joe and promised to repay. Jennifer accepts the money and leaves. Jennifer never sends Timmy the second set of keys. Timmy later decides the car is worth only $500. He decides not to pay Joe and instead gives the vehicle to Joe, explaining his plan. Joe accepts the car and drives away, secretly planning to sue Timmy for the rest of the money. When Timmy is sued by Joe, he makes a claim against Jennifer and claims she should have to compensate him for losses because they never had a valid contract since the car was not worth the $1,000 Jennifer claimed it was.
-Can Joe successfully sue Timmy for the rest of the money owed?

Accepted Answer

A)   Yes, because the debt is a liquidated debt.
B)   Yes, because the car which Joe accepted was worth less than the debt owed.
C)   Yes, because the debt is unliquidated debt.
D)   No, because there is an exception to the rule regarding liquidated debt when the debtor offers different performance.
E)   No, but Joe can sue Jennifer for selling Timmy a car with inadequate consideration.F) B) and D)
G) A) and E)

Exam 15: Consideration

Correct Answer
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Correct Answer
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Gabriel is not required to all...
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Which of the following is true regarding the preexisting duty rule?

Correct Answer
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Correct Answer
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Correct Answer
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Upon graduating from college, Anum receives a job offer across the country and moves there, giving up her apartment and cancelling all her other job interviews in the process. After she arrives, she is informed that there is no job. In most states, what may she recover?

Correct Answer
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Correct Answer
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When a debt is liquidated, the parties may enter into an accord and satisfaction.

Correct Answer
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Which of the following was involved when the government, in attempting to help AIG, agreed to lend AIG up to $85 billion in exchange for nearly 80 percent of AIG's stock?

Correct Answer
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Correct Answer
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Correct Answer
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The performance of a duty one is obligat...
View Answer

Correct Answer
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Consideration is optional in every unilateral contract.

Correct Answer
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Which statement is true regarding the adequacy of consideration?

Correct Answer
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Reasonable reliance on a promise is the only requirement for promissory estoppel to apply.

Correct Answer
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Which of the following is an exception to the rule requiring consideration?

Correct Answer
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In return for his oral promise to pay her $100, Emma promises her uncle that she will not violate laws against speeding for one year. Emma abides by her promise, but her uncle refuses to pay. Which of the following is true regarding whether Emma is entitled to the money?

Correct Answer
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Which of the following is an example of a situation where the court will consider adequacy of consideration?

Correct Answer
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Correct Answer
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Correct Answer
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Exam 15: Consideration

Correct AnswerverifiedShow Answer

Correct AnswerverifiedGabriel is not required to all...View AnswerShow Answer

Which of the following is true regarding the preexisting duty rule?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Upon graduating from college, Anum receives a job offer across the country and moves there, giving up her apartment and cancelling all her other job interviews in the process. After she arrives, she is informed that there is no job. In most states, what may she recover?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a debt is liquidated, the parties may enter into an accord and satisfaction.

Correct AnswerverifiedShow Answer

Which of the following was involved when the government, in attempting to help AIG, agreed to lend AIG up to $85 billion in exchange for nearly 80 percent of AIG's stock?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe performance of a duty one is obligat...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Consideration is optional in every unilateral contract.

Correct AnswerverifiedShow Answer

Which statement is true regarding the adequacy of consideration?

Correct AnswerverifiedShow Answer

Reasonable reliance on a promise is the only requirement for promissory estoppel to apply.

Correct AnswerverifiedShow Answer

Which of the following is an exception to the rule requiring consideration?

Correct AnswerverifiedShow Answer

In return for his oral promise to pay her $100, Emma promises her uncle that she will not violate laws against speeding for one year. Emma abides by her promise, but her uncle refuses to pay. Which of the following is true regarding whether Emma is entitled to the money?

Correct AnswerverifiedShow Answer

Which of the following is an example of a situation where the court will consider adequacy of consideration?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Gabriel is not required to all...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The performance of a duty one is obligat...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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