Q&A Hero

Q: Which of the following meets the requirements of consideration? A. A promise not to engage in a crime or tort B. A promise without a binding obligation C. A promise that involves the exchange of a legal value D. A promise to do a preexisting duty

Q: Consideration can be a(n) _____ in the case of a unilateral contract. A. security B. guarantee C. act D. promise

Q: In deciding whether consideration necessary to form a contract exists, a court must determine whether: A. the consideration given by each party is of roughly equal value. B. the consideration conforms to the subjective intent of the parties. C. the consideration has sufficient monetary value. D. there is mutuality of consideration.

Q: Historically free made promises were not enforced unless they had what supporting them? A. Witnesses of good character B. A signed statement of the Secretary of State C. Consideration D. Affidavits of profit attached to the promise

Q: In order for the consideration requirement in contracts to be met: A. the consideration given by each party must be of roughly equal value. B. each party must give consideration. C. the consideration must have monetary value. D. the consideration must consist of some form of property.

Q: UCC covers accord and satisfaction by the use of an instrument called "full payment" check.

Q: In return for services Charles performed for Richard in the past, Richard promises to pay Charles $1000. There is no consideration for Richard's promise.

Q: A promissory estoppel cannot be applied in the case of the absence of a binding consideration.

Q: A creditor who fails to file suit to collect a debt within the time prescribed by the appropriate statute of limitations loses the right to collect it.

Q: Mr. Blue gave his favorite nephew Jim Jr, who is a mechanic, $1000 in January. Later that year he needed his car repaired. In the sales contract Mr. Blue indicated that the amount owed should be deducted from the money already paid. A court will find that Mr. Blue failed to give proper consideration for the contract.

Q: Michael and William contracted for Michael to mow William's lawn once a week for 20 weeks, at a price of $20 per week. Later, without terminating the first contract, the parties modify the contract as follows: Michael will mow William's lawn in exactly the same way for exactly the same time period, in exchange for William's promise to pay Michael $22 per week. There is no consideration for William's promise.

Q: Unlike the UCC, the CISG requires new consideration to modify a contract.

Q: A promise not to sue another party is not consideration, because the promise does not convey any legal value to the other party.

Q: David, a debtor, owes debts to creditors Paul, Mark, and Gary. Paul, Mark, and Gary agree with each other and with David to release him from his debts, in exchange for his promise to pay Paul, Mark, and Gary 75 percent of the amount he owes each of them. This is called a composition agreement, and such agreements generally are binding contracts.

Q: Mr. Green agrees to an offer to drive Ms. White to the airport for $20, but "only if I feel like it". Mr. Green has failed to give sufficient consideration to create a contract with Ms. White.

Q: A contract in which one party to the agreement agrees to buy all of the produced goods of the other party is called a requirements contract.

Q: John promises to pay Robert $100 per week, in exchange for Robert's promise not to beat John up. There is no consideration for John's promise.

Q: According to the provisions of UCC, an exclusive dealing contract imposes a duty only on the distributor to use his/her best efforts to sell the goods.

Q: The rule on adequacy of consideration reflects the laissez-faire assumption of freedom of contract.

Q: Gross inadequacy of consideration is by itself a sufficient reason to set aside a contract. FALSE According to the law, gross inadequacy of consideration is never sufficient reason to prove lack of true consent or contractual capacity.

Q: Mr. Green agrees to purchase a lawn mower from Ms. White for $300. The act of payment of $300 by Mr. Green is consideration for the act of passing ownership of the lawn mower from Ms. White to Mr. Green.

Q: Consideration can be a promise for another promise.

Q: Owen once owed Carl a $1,000 debt, but the statute of limitations ran on that obligation, discharging Owen. Later, Owen promises in writing to pay Carl the debt. Why is there no consideration for this promise? Why is it binding anyway? What additional requirement do some states impose to make the promise binding?

Q: Consideration is what distinguishes enforceable agreements from gratuitous promises.

Q: A promise to refrain from smoking can be legal consideration because refraining from a legal right, the right to smoke, can be consideration.

Q: In determining whether consideration exists, the law is not concerned with any disproportion in value between the things exchanged in a contract.

Q: Arthur contracts to sell Ben his house for $100,000. Later the parties modify the contract by changing the price to $110,000. All other terms remain the same. Why is there no consideration for the second agreement? State two ways in which the parties can circumvent this problem.

Q: In general, settlements of liquidated debts are not binding due to the absence of consideration, while settlements of unliquidated debts are a binding accord and satisfaction. As a matter of technical consideration law, what justifies this distinction?

Q: Ben, an accountant in Los Angeles, interviewed with Matt, a CPA in San Francisco. At the end of his interview, Matt, the personnel manager, told Ben: "I look forward to working with you. Please let me know if I can help you prepare for your move to San Francisco." Ben returned to Los Angeles, quit his job, gave a 30-day notice to his landlord, rented an apartment in San Francisco, and moved to San Francisco. Ben then called Matt to ask if he could start his job the following week. Matt replied that Ben had no job with him. Ben wants to recover the cost of moving expenses from Matt. Under what legal theory may he proceed? Discuss the arguments that Ben and Matt will each make if the claim is brought.

Q: Mr. Blue gave Mr. Green $1000 to help his family out. Later Mr. Blue entered into a sales contract with Mr. Green and wanted the consideration to be in part the $1000. What is the term for the $1000? A. Past Consideration B. Future Consideration C. Equitable exchange D. Present Intent

Q: Why are "disguised gift" promises involving nominal consideration nonbinding because of the absence of consideration? Explain with one example. "Disguised gift" promises involving nominal consideration are nonbinding due to the bargained-for exchange requirement. Suppose that Dad promises to give Donald a Toyota Supra Turbo for his graduation, in exchange for Donald's promise to pay Dad $1. No doubt Donald promised the $1 to get Dad's promise, but how could Dad have promised Donald the car to get Donald's promise of $1?

Q: Which of the following will be legally binding on all the parties despite the lack of consideration? A. A promise to donate money to a charity which was relied upon by the charity in incurring large expenditures. B. An oral employment agreement for a term of nine months from the date the agreement was formed. C. An irrevocable oral promise by a merchant to keep its offer open for 60 days. D. A material modification signed by the parties to a contract to purchase and sell a parcel of land.

Q: In order to reduce creditor attempts to pressure debtors to reaffirm, which of the following acts requires that a reaffirmation promise be made prior to the date of the discharge and gives the debtor the right to revoke his promise within 30 days after it becomes enforceable? A. The National Labor Relations Act B. The Bankruptcy Abuse Prevention and Consumer Protection Act C. The Uniform Debt-Management Services Act D. The Bankruptcy Reform Act

Q: Gift promises are not generally enforceable because they lack: A. legality. B. capacity. C. consideration. D. agreement.

Q: Which of the following is an exception to a consideration requirement? A. Bargained-for exchange B. Charitable subscription C. Nominal consideration D. Adequacy of consideration

Q: An accident on a state highway rendered Jill in comatose state for nearly a month. There was an old nurse who used to take care of her then. After her recovery, Jill felt so indebted to the nurse that she contracted to transfer all her assets to her to fulfill her (Jill's) moral obligation. Although this contract lacks ______, it can be enforced. A. value B. consideration C. acceptance D. capacity

Q: Which of the following will be legally binding on all parties despite lack of consideration? A. An irrevocable oral promise by a merchant to keep an offer open for 60 days. B. A promise to donate money to a charity which the charity relied upon in incurring large expenditures. C. A promise to pay for the college education of the child of a person who saved the promisor's life. D. A signed modification to a contract to purchase a parcel of land.

Q: Why is past consideration not a consideration in a present promise? A. It falls under exceptions to consideration. B. It does not pertain to the present exchange. C. It is not covered under the UCC codes for consideration. D. It involves an issue of moral obligation.

Q: Helen worked for ABC Motors for 25 years. The president of ABC said to her: "In consideration of your past service for 25 years, I promise to give you a new car next week." However, he did not give the car. Is this promise legally enforceable? A. Yes, a contract was formed. B. Yes, promissory estoppel requires enforcement of the promise. C. No, legal consideration is absent. D. No, legal capacity is absent.

Q: Which of the following is a relevant consideration? A. A preexisting duty B. Agreement to settle an unliquidated debt C. A preexisting moral obligation D. Nominal consideration

Q: Which of the following is an element of a promissory estoppel? A. The promisee should reasonably expect to induce reliance B. Reliance on the promise by the promisor C. A promise to pay liquidated debts D. Injustice to the promisee as a result of alliance

Q: A reaffirmation promise has to be made prior to the date of the bankruptcy discharge and gives the debtor the right to revoke his promise within 30 days after it becomes enforceable. This is the requirement of: A. charitable subscriptions. B. promises to pay debts barred by statutes of limitations. C. promises to pay debts barred by bankruptcy discharge. D. promissory estoppels.

Q: Able borrowed $10,000 from Baker, promising to return it with $1,000 interest on January 1, 2006. There is no dispute that Able owes Baker $11,000 due on January 1, 2006. On that day, Able gave Baker a valid check in the amount of $10,500 marked "payment in full for loan due January 1, 2006." Baker accepted that check and deposited it into his account. If Baker then sues Able for the unpaid $500, what would the result be? A. Able wins, because Baker accepted the lesser payment. B. Able wins, because Baker made an implied promise to accept $10,500 as full payment, thereby forgiving $500 of the loan. C. Baker wins, because Able gave no consideration in exchange for Baker's promise to forgive $500 of the loan. D. Baker wins, because marking "payment in full" can never relieve a party of its original obligations under a contract.

Q: In which of the following circumstances is a debt settlement a binding contract? A. Where the amount of the debt is uncertain or subject to dispute. B. Where the amount of the debt is certain and undisputed. C. Where the only consideration the creditor gives the debtor is his promise not to sue the debtor on the original debt. D. Where the settlement is part of a composition agreement.

Q: Which of the following is true of preexisting contractual duties and their modification under the UCC? A. There is no provision of modifications due to unforeseen circumstances. B. No modifications can be made to an existing contract that is binding. C. Modification requires "mere agreement" on the part of those involved. D. Rules for contractual modifications are different for the UCC and the CISG.

Q: The settlement of an unliquidated debt is called a(n): A. forbearance to sue. B. accord and satisfaction. C. past consideration. D. moral obligation.

Q: X and Y have a contract which obligated X to sell Y 100 boxes of screws for $100. The parties orally modify the contract so that X will sell Y the same 100 boxes of screws for $125. The second agreement is: A. binding because it is due to unforeseeable situation. B. binding by virtue of being mutually agreed on. C. not binding because it is an outputs contract. D. not binding due to the promise of performing a preexisting legal obligation.

Q: Patricia has requested extra payment because abnormal subsurface rock formations made excavation on the construction site far more costly and time-consuming than could have been reasonably expected. The court will: A. enforce such modifications in contract. B. allow the party to rescind such a contract. C. consider the contract voidable. D. consider the contract unenforceable.

Q: Ron was employed by Mass Co. in 1970. At that time, he was given an employee handbook that described the particular steps that had to be taken before an employee could be fired. Later on, in 2000, Mass published a new handbook by which all workers status were changed to employment-at-will workers. Mass then fired Ron. Ron claimed he was terminated without cause and was not afforded procedures described in the 1970 handbook, such as an appeal or review of the decision. He sued Mass under breach of contract based upon the 1970 employee handbook. Will he succeed? A. Yes, because the modifications in 2000 were not by mutual consent and for consideration. B. No, because the employee handbook contains terms and conditions of the employment contract. C. Yes, because Mass Co. has arbitrarily terminated Ron. D. No, because Ron had acquiesced to the modification by not raising any objection.

Q: What is the "mailbox rule"? What risk does it create for the offeror?

Q: The UCC states that a properly dispatched acceptance sent by a reasonable means of communication within a reasonable time is effective on dispatch. What does the UCC mean by "reasonable" here?

Q: Why is an offeree's silence regarding a contract not considered to be an acceptance of it?

Q: Why does the Code provide for "accommodation" in cases of acceptance by shipment of nonconforming goods?

Q: The original offeree is one who: A. first makes the offer and determines its terms and conditions. B. has the legal power to accept an offer and create a contract. C. hears of the contract indirectly and has an intent to accept. D. first accepts the additional terms presented by the offeree.

Q: Arthur offered to sell his house to Mike for $50,000. Even before Mike responded to the offer, Jack learnt of the offer and called up Arthur to accept the offer. Jack's action represents a(n) _____. A. offer B. promise C. notification D. acceptance

Q: What section of the UCC states that an order to a manufacturer requesting shipment of goods may be accepted by a prompt shipment of the goods? A. 2-206 B. 9-301 C. 1-105 D. 2-345

Q: Why is the mirror image rule not strictly applied to modern commercial transactions?

Q: An offer which is unclear about the form of acceptance that is necessary to create a contract, is called a(n) _____ offer. A. ambiguous B. reasonable C. implied D. counter

Q: An ambiguous offer may be accepted in any manner that is _____ in light of the circumstances. A. stipulated B. authorized C. recognizable D. reasonable

Q: The shipment of nonconforming goods intended as an accommodation to the buyer is a(n) _____. A. ambiguous offer B. prompt shipment C. counteroffer D. inquiry regarding terms

Q: April Roberts ordered hundred 19-inch color television sets from Carl Soans and requested for a prompt shipment of the goods. Carl promptly shipped fifty 21-inch color television sets and fifty 19-inch color television sets without informing April that the shipment of nonconforming television sets was an accommodation. Which of the following is true? A. There is no acceptance because Carl's shipment materially differed from the terms of the offer. B. There is an acceptance and April is bound to pay the reasonable value of the fifty 21-inch television sets she did not ask for. C. There is an acceptance but Carl has breached the contract by shipping nonconforming television sets. D. There is a new offer that Carl has made by sending the nonconforming goods which April can accept or reject.

Q: Which of the following is true regarding silence as an acceptance? A. Contract law explicitly recognizes silence as constituting acceptance. B. An offeree's silence is considered acceptance when he/she indicates so. C. An offeror can impose on the offeree a duty to respond to the offer. D. The Code explicitly recognizes silence as constituting acceptance.

Q: Sue Sandon and Joe Rhine have concluded their agreement in all substantial matters of their contract for goods offer like price, quantity, and mode of delivery but the formal written agreement has not been signed yet. Is there a binding contract at present? A. Yes, because an oral contract should suffice. B. Yes, because a contract is formed at the time the agreement is concluded. C. No, because the minor terms also need to be taken care of. D. No, because the agreement is not yet signed and thus, legally unenforceable.

Q: Mr. Yellow delivers a stack of newspapers to Mr. Green's store to see if he wants them. A note attached indicates the stack of papers is $50. Mr. Green without communicating an acceptance sold the entire stack of papers to his customers. What is the status of the agreement between Mr. Yellow and Mr. Green? A. There is no contract because Mr. Green did not expressly accept the offer B. There is a contract because Mr. Green accepted by implied action C. There is no contract because the goods are treated as gifts to Mr. Green D. There is no contract because the Secretary of State was not notified

Q: Under the common law, an offer for a unilateral contract: A. is accepted by full performance of the act requested by the offer. B. is accepted either by an appropriate act or an appropriate promise. C. is accepted by whatever means are reasonable under the circumstances. D. is accepted by making the promise requested by the offer.

Q: How can courts prevent an offeror from revoking a unilateral contract once the offeree has started performance? A. By providing additional terms according to the Code's gap-filling provisions B. By holding that the offeree's acceptance has curtailed the power of revocation C. By holding that the offeree's performance has made it a bilateral contract D. By making material changes in the terms of the original contract

Q: A bilateral contract is accepted by when the offeree: A. performs the requested act. B. makes the promise requested by the offer. C. accepts the offer in silence without prior indication. D. makes additional inquiries regarding the terms.

Q: Mr. Green creates a unilateral contract with nephew Paul. Mr. Green promises to buy Paul a laptop if he gets accepted to college. In order for Paul to accept this contract what must he do? A. Get accepted into college B. Send a certified letter to Mr. Green agreeing to the terms of the contract C. Immediately call and orally accept the terms of the contract with Mr. Green D. Notify the Secretary of State's office that he accepts Mr. Green's contract

Q: Which of the following is true regarding the approach taken by the UCC toward the proper means of acceptance and the implications of using it or not using it? A. If the offer authorizes a certain means of acceptance, the offeree must use that means or else there is no acceptance. B. If the offer authorizes a certain means of acceptance and the offeree uses another means, a contract is formed, but never before the offeror receives the acceptance. C. Where the offer stipulates a certain means of acceptance, any reasonable means of acceptance will create a contract. D. The UCC does not change the traditional rule that, where the offer stipulates a certain means of acceptance, the offeree must use that means or there is no contract.

Q: What is the legal status of an improperly dispatched acceptance that was sent by a means of communication that was nonauthorized by the offeror? A. It is valid but unenforceable. B. It is invalid but enforceable. C. It is effective when received. D. It leads to an immediate revocation.

Q: Which of the following considers a properly dispatched acceptance sent by a reasonable means of communication within a reasonable time to be effective on dispatch? A. Traditional contract laws B. UCC C. CISG D. Restatement (Second)

Q: Judith George makes an offer to sell a plot of land using a normal letter and states no authorized means by which the offeree, Helga Holmes must respond if she accepts. If Helga accepts the offer using a normal letter, which of the following is true? A. The acceptance is effective upon dispatch. B. The acceptance is effective when it is received. C. The offer is invalid because it fails to stipulate the means of acceptance. D. The acceptance would be effective upon dispatch even if the means of acceptance is unreasonable.

Q: In general, the mailbox rule is beneficial to: A. the offeror. B. the offeree. C. the courts. D. third-party beneficiaries.

Q: What can an offeror do to minimize the risk posed by the mailbox rule? A. Include separate additional terms B. Include a receipt stipulation in the contract C. Select only known parties as original offerees D. Revoke the offer before acceptance

Q: Under the mailbox rule, the acceptance of an offer is effective at the time the acceptance is dispatched unless: A. both the offeror and offeree are merchants. B. the offer proposes a sale of real estate. C. the acceptance is not in the authorized mode of communication. D. the acceptance is lost or never reaches the offeror.

Q: On Thursday, Trista Dylan receives a letter from Charlie Holmes offering to sell her a diamond ring and stating that: "if you choose to accept, you must do so prior to 2:00 p.m. tomorrow." Trista had a telegram of acceptance dispatched well before 2:00 p.m. on Friday but it is delivered to Charlie's home only at 2:15 p.m. Do Trista and Charlie have a binding contract? A. No, because Trista's purported acceptance was delayed. B. Yes, because Trista dispatched the telegram prior to 2:00 p.m. C. No, because Trista's use of a telegram was not stipulated in the offer. D. Yes, unless Charlie is not home to receive the telegram.

Q: Ian Kendler makes Brian Hyson an offer for a plot of land. In the offer, Kendler stipulates that the acceptance of the offer must be sent by registered mail but Hyson mails his acceptance through the regular postal service. Which of the following is true? Assume that the Restatement (Second) of Contracts does not apply. A. There is no acceptance and no contract. B. A contract was formed at the time Hyson dispatched the letter. C. A contract was formed at the time Kendler received the letter. D. The acceptance is invalid because the contract does not relate to sale of goods.

Q: What is the term for "a manifestation of assent to the terms made by the offeree"? A. The Offer B. The Acceptance C. The Consideration D. Revocation

Q: Which party to contract negotiations is the master of the offer and can specify what behavior is necessary to constitute a valid acceptance? A. The Offeror B. The Offeree C. The Secretary of State D. The court

Q: Rex Garner recently made an offer to Harry Barns for the sale of his shop using a registered letter. The offer says that Harry "may accept by registered letter" and this detail is an example of a _____. A. contract B. notification C. rejection D. stipulation