Q&A Hero

Q: Sully signs a contract to borrow $200,000 from Riverside Bank to buy a house. In the contract, Sully agrees to pay a certain rate of interest on the amount of borrowed funds at monthly intervals for thirty years. This debt is a. an illusory promise. b. liquidated. c. past consideration. d. unliquidated.

Q: Dave's uncle tells Dave that if "he feels that Dave deserves it," he will give Dave $1,000 when Dave graduates from college. Dave's uncle's promise is a. illusory. b. enforceable. c. a forbearance. d. a preexisting duty.

Q: Mobile Media Company contracts to hire Nada for one year at $35 per hour, reserving the right to cancel the contract at any time after Nada begins performance by giving two weeks' notice. This promise is a. an enforceable contract. b. an illusory promise. c. an option-to-cancel clause. d. a requirement contract.

Q: Industrial Engineering, Inc., promises to give stock options to Jasmine for processes she has already designed for the firm. This promise is enforceable a. because it is a new contract. b. because it is an illusory promise. c. because it is supported by past consideration. d. under no circumstances.

Q: Mariah promises to pay her assistant Nadine $10,000 in consideration of the services she provided over the years. Mariah never pays Nadine. Mariah is a. liable for payment of the $10,000. b. liable only if Nadine still works for Mariah. c. not liable, because the consideration is in the past. d. not liable, because the consideration was unintentional.

Q: Sally contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract. Sally and Tasty a. may rescind their entire contract. b. may rescind their contract to the extent that it is executory. c. must perform their entire contract. d. must perform the part of their contract that is executory.

Q: Sally contracts with Tasty Pizza Company to deliver its products. Both parties change their minds, however, and inform each other that they would like to cancel the contract. The next day, Sally changes her mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sally and Tasty a. may agree to a new contract, but it cannot include a new price. b. may agree to a new contract that includes the new price. c. must perform their original contract. d. must perform the part of their original contract that is executory.

Q: Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay. If Teatro says it is asking for the extra $250,000 because it has encountered extraordinary unforeseen difficulties that will add considerable cost to the project, the agreement isa. enforceable as the consideration is past.b. enforceable because of unforeseen difficulties.c. unenforceable as an illusory promise.d. unenforceable due to the preexisting duty rule.

Q: Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay. If Teatro says it is asking for the extra $250,000 because ordinary business expenses have increased, the agreement isa. enforceable as the consideration is past.b. enforceable because of unforeseen difficulties.c. unenforceable as an illusory promise.d. unenforceable due to the preexisting duty rule.

Q: Teatro Restoration, Inc., begins renovating an old theater for Urban Edge Productions, but after three months Teatro demands an extra $250,000. Urban Edge agrees to pay. If Teatro offers no reason for the extra $250,000, but says only that it will stop work if it is not paid, the agreement isa. enforceable as the consideration is past.b. enforceable because of unforeseen difficulties.c. unenforceable as an illusory promise.d. unenforceable due to the preexisting duty rule.

Q: Frisco offers to buy a Gibson guitar owned by Hayden for twice what she paid for it. She accepts and hands the guitar to Frisco. Her delivery of the guitar isa. not consideration because her voluntary consent may be lacking.b. not consideration because the exchange is not a bargain.c. consideration.d. not consideration because the value is not legally sufficient.

Q: Under a contract with Valley Vineyard, Walsh begins grading a terraced hillside for the planting of grapes. Halfway through the project, Walsh asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." Valley agrees but later refuses to pay. Their agreement is a. unenforceable because Walsh's performance was a preexisting duty. b. unenforceable because Valley's promise was illusory. c. enforceable. d. unenforceable because Walsh's request modified the contract.

Q: Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deala mortgage loan secured by Bridey's purchase of a housewas unfair because the consideration for their contract was inadequate. If, as Bridey claims, the consideration for this contract is inadequate, it may indicate a lack of a. market value for Bridey's house. b. voluntary consent to the contract on Bridey's part. c. appraisal by a third party on behalf of Continental. d. standards for the granting of credit on Continental's part.

Q: Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deala mortgage loan secured by Bridey's purchase of a housewas unfair because the consideration for their contract was inadequate. The court is most likely to evaluate the adequacy of consideration if a. one of the parties claims that they entered into an unwise contract. b. something exchanged is not of direct economic or financial value. c. the items exchanged are of unequal value. d. there is a large disparity in the amount or value of the consideration exchanged.

Q: Bridey defends against a suit for breach of contract by Continental Mortgage Company by claiming that their deala mortgage loan secured by Bridey's purchase of a housewas unfair because the consideration for their contract was inadequate. "Adequacy" of consideration refers to a. "how much" consideration is given. b. legally sufficient value in the eyes of the law. c. the intangible value to a contracting party of a thing exchanged. d. the substantiality of the consideration exchanged.

Q: Mobile Minutes Company offers Nate an unlimited number of monthly phone minutes for $4.50 per month. Nate accepts. If a dispute arises, a court would likely a. enforce the deal after questioning the adequacy of the consideration. b. not question the adequacy of the consideration. c. rewrite the deal after questioning the adequacy of the consideration. d. set aside the deal after questioning the adequacy of the consideration.

Q: Valley Paragliders Association files a suit against Wing Designers, Inc., claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the consideration if a. there is a large disparity in the amount of consideration exchanged. b. the consideration involves the performance of services. c. something of value passed between the parties. d. the consideration is worth less than $100.

Q: Quentin questions whether there is consideration for his contract with Rainey to exchange his performance with the Symphonic Saxophone Sextet for her payment of a certain amount. To constitute consideration, there must be a. a payment. b. a performance. c. a bargained-for exchange. d. serious thought underlying each party's intent to contract.

Q: Sparky offers Teodora $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely a. enforce the deal after questioning the adequacy of consideration. b. not question the adequacy of the consideration. c. rewrite the deal after questioning the adequacy of consideration. d. set aside the deal after questioning the adequacy of consideration.

Q: Aron questions whether there is consideration for his contract with Banquet Hall to exchange his musical performance of country tunes at select social events for Banquet's payment of a certain amount. To constitute consideration, the value of whatever is exchanged must be a. objectively worthy. b. precisely adequate. c. legally sufficient. d. practically sound.

Q: Rollo promises to perform, for a price, shoe repair services in affiliation with Togs "˜n Things, a clothing store. To support a contract, the consideration exchanged by the parties must be a. adequately considerate. b. equally valuable. c. legally sufficient. d. wisely priced.

Q: Henry promises not to open his restaurant before 10:00 a.m. if Suzy, who owns a bakery next door to him, promises to close her bakery by 4:00 p.m. Henry's consideration is a. the destruction of a legal relationship. b. the creation of a legal relationship. c. a forbearance. d. an exchange of money.

Q: Jenilee promises to pay Kyle $500 because "he does not have as much money as other people." Jenilee's promise is a. enforceable because society wants people to keep their promises. b. enforceable because the redistribution of wealth is a valid social goal. c. not enforceable because Jenilee could have paid Kyle more. d. not enforceable because Kyle has not given consideration in return.

Q: Kingston promises to pay Melina $500 to install a sump pump in his warehouse. Melina completes the installation. The act of installing the pump a. imposes a moral obligation on Kingston to pay Melina. b. imposes no obligation on Kingston unless he is satisfied with the job. c. is not sufficient consideration because it is not goods or money. d. is the consideration that creates Kingston's obligation to pay Melina.

Q: Statutes of limitations in all states require a debtor to pay a debt within a specified period of time.

Q: A debtor who promises to pay a previous debt even though recovery is barred by a statute of limitations makes an enforceable promise.

Q: Under the doctrine of promissory estoppel, a promise will not be enforced unless it is supported by consideration.

Q: The doctrine of promissory estoppel does not apply if there exists a clear and definite promise.

Q: A covenant not to sue does not always bar further recovery.

Q: A release does not require consideration to be legally binding.

Q: A covenant not to sue is against public policy.

Q: In many states, a release contract must be in a signed writing.

Q: A release bars any further recovery beyond the terms stated in the release.

Q: For accord and satisfaction to occur, the amount of the debt cannot be in dispute.

Q: There can be no satisfaction unless there is first an accord.

Q: Even if the terms of a contract express such uncertainty of performance that the promisor has not definitely promised to do anything, the promise binds the promisor.

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

Q: A contract that one party retains the exclusive right to cancel at any time is unenforceable.

Q: An illusory promise is an enforceable promise.

Q: Risks ordinarily assumed in business constitute consideration for the modification of a contract.

Q: It is illegal for two parties to mutually agree to rescind a valid contract.

Q: Past consideration can be legally sufficient consideration.

Q: A promise made in return for an act or event that has yet taken place is unenforceable.

Q: Rescission is the unmaking of a contract so as to return the parties to the positions they occupied before the contract was made.

Q: If, during the performance of a contract, extraordinary difficulties arise that were totally unforeseen at the time the contract was formed, a court may allow an exception to the preexisting duty rule.

Q: A promise to do what one already has a legal duty to do constitutes legally sufficient consideration.

Q: A preexisting duty may arise from a previous contract.

Q: A transaction that lacks a bargained-for exchange lacks an element of consideration.

Q: The element of bargained-for exchange distinguishes contracts from gifts.

Q: A promise by one party to pay another for refraining from an action that one has a legal right to undertake is enforceable.

Q: For consideration to have "legally sufficient value," it must consist of goods or money.

Q: Inadequate consideration always indicates undue influence.

Q: In general, courts consider the fairness of a contract when deciding if the contract is binding.

Q: Adequacy of consideration refers to how much consideration is given.

Q: Forbearance is the act of refraining from doing something that one has a legal right to do.

Q: A determination of whether consideration exists depends on a comparison of the values of the things exchanged.

Q: Consideration in bilateral contracts normally consists of a promise in return for a performance.

Q: In contract law, the term consideration refers to the serious thought that underlies a party's intent to enter into a contract.

Q: Consideration is the value given in return for a promise.

Q: Beta Software Company and Gamma Sales Corporation agree to follow a certain security procedure in transacting their business online. Beta fails to follow the procedure, however. Due to this failure, Beta does not detect an error in the deal, which will have a negative impact on Gamma's interest in the deal. Can Gamma avoid the effect of this error? How?

Q: Creative Solutions Corporation (CSC) sells business application softwareaccounting and bookkeeping programs, blank business forms, inventory control functions, and the likein different combinations, in different packages, at different prices, downloadable online. To complete a deal, a purchaser clicks on a button that, with reference to certain terms, states, "I agree." What is this sort of agreement called? Do the parties have a binding, enforceable contract that includes the terms? Explain.

Q: National Shipping Corporation and Office Software Company (OSC) make a deal for OSCs products, communicating entirely online. Under the UETA, an electronic record is considered sent a. only at a midway point between the sender and recipient. b. only on coming into the recipient's control. c. only on leaving the sender's control. d. when it leaves the sender's control or comes into the recipient's control.

Q: Michelle gives out a business card with an e-mail address on it. It is reasonable to infer that Michelle has consented to a. transact business electronically. b. submit to the jurisdiction of any selected forum. c. accept and respond to any correspondence sent to that address. d. nothing.

Q: Bill and Stacy enter into a contract that falls within the provisions of the UETA. Under the UETA, "information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form" is a. an e-document. b. an e-signature. c. an e-transaction. d. a record.

Q: Kay and Leo enter into a contract that falls within the provisions of the UETA. Under the UETA, "an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record" is a. an e-document. b. an e-signature. c. an e-transaction. d. a record.

Q: Standard Purchasing Corporation and Total Sales, Inc., enter into a partnering agreement. Under a partnering agreement, parties agree a. in advance to terms that apply to their future e-transactions. b. to become partners. c. to conduct transactions solely in electronic form. d. to resolve all disputes without involving a third party.

Q: Fred's Paper Shop frequently buys paper from Online Office Supplies, Inc. Online Office Supplies and Fred's Paper Shop decide to enter into a partnering agreement. One of the advantages of entering into a partnering agreement is that a. the costs of all transactions will be reduced. b. the likelihood that disputes will arise under their contract is reduced. c. neither party will be able to file suit for breach of contract. d. Fred's Paper Shop will not be able to file suit for breach of contract.

Q: Under the E-SIGN Act, Phillip may use an e-signature in all of the following instances except a. opening an account with a financial institution. b. obtaining a mortgage. c. buying insurance. d. signing his will.

Q: First Design Corporation, a business firm, and Glen, a consumer, make a deal over the Internet that involves e-signatures. Under the E-SIGN Act, the e-signatures a. are as valid as signatures on a paper document. b. must be encrypted to be enforceable. c. must have been inscribed on a digital tablet to be authenticated. d. must relate to a partnering agreement.

Q: Clean Health Insurance, Inc. sends Kathy a health insurance termination. The health insurance termination is a. governed by the E-SIGN Act. b. not governed by the E-SIGN Act. c. governed by Article 2 of the UCC. d. governed by Article 2A of the UCC.

Q: Vivian and Rob enter into a contract under which Vivian will clean Rob's house every week for a year. Under the E-SIGN Act, in order for e-signatures to be enforceable for this contract a. Vivian and Rob must both agree to use e-signatures. b. only Vivian needs to agree to use e-signatures. c. only Rob needs to agree to use e-signatures. d. Vivian and Rob must both register their e-signatures with the federal government.

Q: Jared downloads some video games from the Internet. There is a page indicating the terms of use, but nothing that requires Jared to affirmatively indicate his consent before downloading the games. These terms are a. a click-on agreement. b. browse-wrap terms. c. an attribution agreement. d. a shrink-wrap agreement.

Q: Digital Products Company includes a shrink-wrap agreement in a transaction with Eagle Engineering Corporation. A shrink-wrap agreement is an agreement whose terms are expressed a. in code at the end of a computer program . b. inside a box in which goods are packaged. c. in small print at the end of a paper contract signed by both parties. d. on a computer screen.

Q: Hi-Lite Manufacturing, Inc., orders supplies online from Indigo Parts Company. To complete the order, the buyer is required to click on a button that says, in reference to certain terms, "I agree." This is a. a click-on agreement. b. a default agreement. c. an attribution agreement. d. a shrink-wrap agreement.

Q: Over the Internet, Red & White Contractors, Inc., arranges to lease storage space from Blue Services Company. To complete the deal, Red & White clicks on a button that says, in reference to certain terms, "I agree." Most likely, the parties have a. a binding contract that includes the terms. b. a binding contract that does not include the terms. c. an unenforceable contract that includes the terms. d. an unenforceable contract that does not include the terms.

Q: Deb buys a song through eSongs, an online music vendor. Before completing the purchase and downloading the song, Deb must agree to a provision stating that she will not make and sell copies of the song. This provision is a. a browse-wrap term. b. a click-on agreement. c. a shrink-wrap agreement. d. a wrap-on agreement.

Q: Mark is creating a Web site through which he will enter into contracts over the Internet. Important terms to include in his offers include a. provisions specifying the remedies if the contract is breached. b. a detailed history of his business. c. glowing reviews from former customers. d. his educational background.

Q: Quality Sales Corporation enters into contracts over the Internet. Quality can protect itself against disputes involving these contracts by making important terms a. reasonably clear. b. difficult to notice. c. impossible to find. d. standardized.

Q: Crafted Iron Works, Inc., offers to design, make, and sell City Transit Agency fourteen streetcars. Crafted authorizes a particular mode of communication, but City Transit sends an acceptance via a substituted means. This acceptance is effective when it is a. in transit. b. received. c. sent. d. written.

Q: Shelby offers to make digital copies of Relay Company's business conference videotapes, CDs, DVDs, and other media for $500. Under the mailbox rule, Relay's acceptance by e-mail will be considered effective when a. received. b. sent. c. followed up by a confirmation letter sent by regular mail. d. composed on a Relay computer.