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Exam 11: Consideration

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Question 21

Multiple Choice

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Joel contracts to hire Huong for one year to tend the orchids in his commercial greenhouse but reserves the right to cancel the employment on one month's notice at any time after Huong begins work.This promise is

A) enforceable.
B) illusory.
C) unliquidated.
D) unforeseen.

E) A) and B)
F) A) and D)

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Question 22

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

A) True
B) False

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Question 23

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Sal contracts with Tasty Pizza Company to deliver its frozen pizza and pasta products to U-Chuse Market and other grocery stores. Both parties change their minds, however, and inform each other that they would like to cancel the contract. -Refer to Fact Pattern 11-4.The next day,Sal changes her mind again and once more offers to deliver Tasty's products.Tasty is willing to deal,but for a new price.Sal and Tasty

Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay. -Refer to Fact Pattern 11-3.If CCC offers,as a reason for the extra $100,000,that extraordinary unforeseen difficulties will add considerable cost to the project,the agreement is

The preexisting duty rule permits a party who is bound by contract to perform a certain duty to use that duty as consideration for a second contract.

XL Retail Sales,Inc.,promises its head buyer Yancey and other salaried employees a bonus at the end of the year if management thinks that the circumstances indicate "a job well done." This promise is

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

A promise to pay for an act that has yet to occur is unenforceable.

Rescission is the dissolution of a contract that returns the parties to the positions they held before the contract.

Two parties can mutually agree to rescind a contract if it is executory.

Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate. -Refer to Fact Pattern 11-2.A court is most likely to evaluate the adequacy of consideration if

Milo files a suit against Neighbors Insurance Corporation under the doctrine of promissory estoppel.Milo must show that

Promissory estoppel requires reliance of a substantial and definite character.

Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate. -Refer to Fact Pattern 11-2."Adequacy" of consideration refers to

An obligation is enforceable only if it is supported by past consideration.

Cut-Rate Construction Company (CCC) begins building a restaurant for Diners Restaurants, Inc., but after two months demands an extra $100,000. Diners agrees to pay. -Refer to Fact Pattern 11-3.If CCC offers no reason for the extra $100,000,but says only that it will otherwise stop construction,the agreement is

Parties are not generally free to make bad bargains.

A release bars further recovery beyond the terms stated in the release.

Numeric Methods Corporation promises to give stock options to Orin,a project schedule manager,for projects that have already been completed ahead of schedule.This promise is

Jean promises to pay Khalil $500 because "he does not have as much money as other people." Jean's promise is