Question 1

In a bilateral contract, the consideration for a promise is a completed act.

Accepted Answer

A) True 
 B)False

Question 2

"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. Ted, a police officer in town, promised Safe Bank officials that he would apprehend Victor. While on duty, Ted arrested Victor at a hamburger joint in town. He found Victor based upon a hunch he had after Ursula, who dated Victor, told him about various places Victor enjoyed eating. The bank refuses to pay either Ursula or Ted 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) B) and E)
G) D) and E)

Question 3

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 after they broke up to enforce two agreements regarding the sale and assignment of property to her?

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) A) and C)
G) C) and D)

Question 4

Which of the following was involved when the government, in attempting to help AIG, agreed with AIG 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) B) and E)
G) A) and C)

Question 5

Tina, an experienced pool contractor, and Bruce agree on a price for Tina to build a pool in Bruce's backyard. While the area is not known for rocks, unfortunately Tina unexpectedly encounters a significant problem with solid rock in the backyard when she starts to dig. She tells Bruce that unless she receives an extra $5,000, she cannot complete the job. Bruce agrees thinking to himself that he has a way out. When Tina finishes the pool, Bruce refuses to pay the additional $5,000. Which of the following is the most likely result of their dispute?

Accepted Answer

A)   Bruce will be required to pay because a typical, unilateral contract is involved, and he got the benefit of his bargain.
B)   Bruce will be required to pay because a typical, bilateral contract is involved, and he got the benefit of his bargain.
C)   Bruce will be required to pay because unforeseen circumstances are an exception to the preexisting duty rule.
D)   Bruce will not be required to pay because he provided no additional consideration, and the preexisting duty rule applies.
E)   Bruce will only be required to pay ½ of the agreed upon amounts because of the calculations involved under the preexisting duty rule.F) A) and D)
G) A) and B)

Question 6

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

Accepted Answer

A)   Richard is correct because cleaning house would not constitute a benefit to the promisor.
B)   Richard is correct because cleaning house would not constitute a detriment to the promisee.
C)   Richard is correct because Denise had only promised - she had not actually performed.
D)   Although, contrary to Richard's assertion, house cleaning can be consideration, it was not in this case because his apartment was already fairly clean.
E)   Richard is incorrect because house cleaning would 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) All of the above
G) B) and D)

Question 7

"Trick or Treat?" Penny has significant credit card debt following her diving trip with her boyfriend, Sam, to the Grand Cayman islands. Some of the diving trips cost more than she expected, and these extra expenses were unforeseen. Penny 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 dive shop for diving equipment she purchased for the trip. Penny is in negotiations with the dive shop over that amount because she had a problem with a mask fogging on the trip and had to replace it while on the trip at a charge of $100. While the mask issue did not significantly interfere with the trip, Penny thought that she should get at least some deduction on the overall bill. Penny called Credit Card Company A and told them that she was a poor 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 Penny just to pay $50, and that would be considered payment in full. The representative sent Penny an e-mail to that effect. Penny was very pleased and went right out and quit her job at the campus bookstore because she did not really like dealing with student problems and thought that with the reduction from Credit Card Company A, she would have no problem in regard to having extra money. Although her parents supplied her with a large monthly allowance, Penny had the job at the bookstore so that she would have more money for clothes shopping and fun activities. In relation to Credit Card Company B, Penny called up and once again pled her case as a poor 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. Penny did not lie about the value of the car, but she made it sound as good as possible. Transfer details regarding the car were worked out through e-mail. Finally, Penny sent the dive shop a check for $1,000 marked "paid in full." Much to her surprise and pleasure, the dive shop did indeed cash the check. Penny, 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 from the dive shop she received a check for $1,000 along with a bill for $2,000. Faced with all these claims, Penny decided to look for work. She ended up two weeks later with a job selling beauty products that she liked much better than the bookstore job. It did not require dealing with pesky students. 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 Penny's obligation to the dive shop?

Accepted Answer

A)   That because the debt was unliquidated and the dive shop cashed the check, an accord and satisfaction occurred, and Penny owes nothing.
B)   That because the debt was liquidated, no accord and satisfaction occurred, and Penny owes the full $2,000.
C)   That in order to satisfy equitable principles, the parties would split the remaining debt with Penny owing $1,000.
D)   That under the UCC, Penny would be required to pay the full amount, but the dive shop would be estopped from charging any interest.
E)   That because the dive shop offered, through issuance of the check, full repayment, no accord and satisfaction existed; Penny owes the full $2,000.F) None of the above
G) A) and B)

Question 8

In a[n] ______ debt, there is no dispute about the fact that money is owed and the amount of money owed.

Accepted Answer

A)   Actual
B)   Acknowledged
C)   Certain
D)   Liquidated
E)   UnliquidatedF) A) and D)
G) B) and E)

Question 9

"Trick or Treat?" Penny has significant credit card debt following her diving trip with her boyfriend, Sam, to the Grand Cayman islands. Some of the diving trips cost more than she expected, and these extra expenses were unforeseen. Penny 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 dive shop for diving equipment she purchased for the trip. Penny is in negotiations with the dive shop over that amount because she had a problem with a mask fogging on the trip and had to replace it while on the trip at a charge of $100. While the mask issue did not significantly interfere with the trip, Penny thought that she should get at least some deduction on the overall bill. Penny called Credit Card Company A and told them that she was a poor 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 Penny just to pay $50, and that would be considered payment in full. The representative sent Penny an e-mail to that effect. Penny was very pleased and went right out and quit her job at the campus bookstore because she did not really like dealing with student problems and thought that with the reduction from Credit Card Company A, she would have no problem in regard to having extra money. Although her parents supplied her with a large monthly allowance, Penny had the job at the bookstore so that she would have more money for clothes shopping and fun activities. In relation to Credit Card Company B, Penny called up and once again pled her case as a poor 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. Penny did not lie about the value of the car, but she made it sound as good as possible. Transfer details regarding the car were worked out through e-mail. Finally, Penny sent the dive shop a check for $1,000 marked "paid in full." Much to her surprise and pleasure, the dive shop did indeed cash the check. Penny, 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 from the dive shop she received a check for $1,000 along with a bill for $2,000. Faced with all these claims, Penny decided to look for work. She ended up two weeks later with a job selling beauty products that she liked much better than the bookstore job. It did not require dealing with pesky students. Assume all credit card company representatives had authority to make the agreements at issue.

-Which of the following should be the result in regard to Penny's obligation to Credit Card Company B?

Accepted Answer

A)   That the company is not bound by its promise because the debt was liquidated.
B)   That because Penny offered and the company accepted a different performance in discharge of the obligation, the company is bound.
C)   That because the car is worth only $1,000, nowhere near the amount of the debt, the company is released from its promise.
D)   That under equitable principles, upon disaffirming the agreement, Penny may keep the car, and the company must take a deduction of 50% on all amounts due.
E)   That under equitable principles, upon disaffirming the agreement, Penny must transfer the car to the company, and the company must take a deduction of 50% on all amounts due after sums received from the sale of the car are credited to Penny's account.F) B) and C)
G) A) and C)

Question 10

Which of the following is true regarding an accord and satisfaction?

Accepted Answer

A)   When amounts agreed upon are paid, the debt is fully discharged.
B)   When amounts agreed upon are paid, the debt is fully discharged except for any late charges due on the initial indebtedness.
C)   When amounts agreed upon are paid, the debt is fully discharged except for any interest due on the initial indebtedness.
D)   When amounts agreed upon are paid, the debt is fully discharged except for any late charges and for any interest due on the initial indebtedness.
E)   When amounts agreed upon are paid, the debt is fully discharged except for any late charges or interest due on the initial indebtedness, or attorney fees of the creditor that are due.F) A) and B)
G) B) and C)

Question 11

Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is no dispute over the amount or existence of the debt, and the creditor agrees?

Accepted Answer

A)   A liquidated debt is involved, and there is an accord and satisfaction.
B)   A liquidated debt is involved, and there is an accord but no satisfaction.
C)   A liquidated debt is involved, and there is neither a satisfaction nor an accord.
D)   An unliquidated debt is involved, and there is an accord and satisfaction.
E)   An unliquidated debt is involved, and there is an accord but not satisfaction.F) D) and E)
G) B) and D)

Question 12

What is the preexisting duty rule?

Accepted Answer

The performance of a duty one ...

Question 13

When an accord and satisfaction is at issue, the ______ is the new agreement to pay less than the creditor claims is owed.

Accepted Answer

A)   Satisfaction
B)   Accord
C)   Seal
D)   Compromise
E)   AcknowledgementF) All of the above
G) A) and E)

Question 14

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

Accepted Answer

A)   Jill is correct.
B)   Jill is correct only if she can establish that she had prior dealings with Richard.
C)   Jill 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)   Jill is incorrect because her acceptance was illusory.
E)   Jill 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) C) and D)
G) B) and E)

Question 15

As a general rule, past consideration qualifies as consideration.

Accepted Answer

A) True 
 B)False

Question 16

As discussed in the case of Double AA Builders Ltd., v. Grand State Construction L.L.C., which of the following may be used to necessitate that a subcontractor perform according to the terms of its bid because the contractor has relied on the subcontractor's bid?

Accepted Answer

A)   Consideration
B)   Primary consideration
C)   Promissory estoppel
D)   Reality estoppel
E)   Secondary considerationF) None of the above
G) A) and E)

Question 17

Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is a dispute over the amount of the debt, and the creditor agrees?

Accepted Answer

A)   A liquidated debt is involved, and there is an accord and satisfaction.
B)   A liquidated debt is involved, and there is an accord but no satisfaction.
C)   A liquidated debt is involved, and there is neither a satisfaction nor an accord.
D)   An unliquidated debt is involved, and there is an accord and satisfaction.
E)   An unliquidated debt is involved, and there is an accord but not satisfaction.F) A) and B)
G) D) and E)

Question 18

In your opinion, should the law require that consideration be in an amount similar in value to the item or services being transferred in order for a contract to be enforceable? Discuss why or why not.

Accepted Answer

Student responses will vary. It seems un...

Question 19

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

Accepted Answer

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

Question 20

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

Accepted Answer

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

Exam 15: Consideration

Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is no dispute over the amount or existence of the debt, and the creditor agrees?

Correct Answer
verified

Correct Answer
verified

When an accord and satisfaction is at issue, the ______ is the new agreement to pay less than the creditor claims is owed.

Correct Answer
verified

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

Correct Answer
verified

In a[n] ______ debt, there is no dispute about the fact that money is owed and the amount of money owed.

Correct Answer
verified

What is the preexisting duty rule?

Correct Answer
verified
The performance of a duty one ...
View Answer

In a bilateral contract, the consideration for a promise is a completed act.

Correct Answer
verified

Correct Answer
verified

In your opinion, should the law require that consideration be in an amount similar in value to the item or services being transferred in order for a contract to be enforceable? Discuss why or why not.

Correct Answer
verified
Student responses will vary. It seems un...
View Answer

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

Correct Answer
verified

As discussed in the case of Double AA Builders Ltd., v. Grand State Construction L.L.C., which of the following may be used to necessitate that a subcontractor perform according to the terms of its bid because the contractor has relied on the subcontractor's bid?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Which of the following is true regarding an accord and satisfaction?

Correct Answer
verified

Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is a dispute over the amount of the debt, and the creditor agrees?

Correct Answer
verified

As a general rule, past consideration qualifies as consideration.

Correct Answer
verified

Exam 15: Consideration

Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is no dispute over the amount or existence of the debt, and the creditor agrees?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When an accord and satisfaction is at issue, the ______ is the new agreement to pay less than the creditor claims is owed.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In a[n] ______ debt, there is no dispute about the fact that money is owed and the amount of money owed.

Correct AnswerverifiedShow Answer

What is the preexisting duty rule?

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

In a bilateral contract, the consideration for a promise is a completed act.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In your opinion, should the law require that consideration be in an amount similar in value to the item or services being transferred in order for a contract to be enforceable? Discuss why or why not.

Correct AnswerverifiedStudent responses will vary. It seems un...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

As discussed in the case of Double AA Builders Ltd., v. Grand State Construction L.L.C., which of the following may be used to necessitate that a subcontractor perform according to the terms of its bid because the contractor has relied on the subcontractor's bid?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is true regarding an accord and satisfaction?

Correct AnswerverifiedShow Answer

Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is a dispute over the amount of the debt, and the creditor agrees?

Correct AnswerverifiedShow Answer

As a general rule, past consideration qualifies as consideration.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The performance of a duty one ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Student responses will vary. It seems un...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified