Business Law, 8e: Chapter 11

Chapter 11
Consideration: The Basis of the Bargain:

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1. Most U.S. courts enforce moral obligations even if consideration is lacking.: a. True
b. False

2. An illusory promise is unenforceable because it lacks consideration.: a. True
b. False

3. A liquidated debt is one in which the existence or amount of the debt is in dispute.: a. True
b. False

4. Most promises to make a gift are unenforceable for lack of consideration.: a. True
b. False

5. Present or past consideration both constitute valid consideration.: a. True
b. False

6. In a surety contract the debtor agrees to be liable for the surety's contract.: a. True
b. False

8. Generally, consideration is the legal benefit to the promisor and a legal burden or detriment to the promisee.: a. True
b. False

9. True consideration occurs only when the value of one promise is equal to the value of the promise given by the other party.: a. True
b. False

10. A past benefit already received by a promisor can be consideration for a new promise.: a. True
b. False

11. Rosita paid John $1,500 to paint her apartment. After John completed the job, she promised him $100 more for his excellent work. Is this additional promise of $100 an enforceable contract?: a. Yes, because it is supported by valid consideration.
b. No, because it is supported only by past consideration.
c. No, because it is supported only by a preexisting obligation.
d. No, because it involves an unliquidated debt.

12. Pat promised to pay Mikko $500 if he would refrain from filing a lawsuit against him for 30 days. Mikko agreed and accepted a $500 check from Pat. Which statement is correct?: a. Mikko's promise to refrain from suing Pat was not supported by legal consideration.
b. This is accord and satisfaction and therefore enforceable.
c. Mikko's promise to refrain from suing Pat was supported by legal consideration and is enforceable.
d. The contract is not enforceable as legal rights to sue cannot be waived.

13. Tommy wants to take out a loan from the bank to buy a car. The bank requires Tommy to have another person sign the loan in case Tommy should default. Mary agrees to co-sign for Tommy. This is:: a. a suretyship contract.
b. an executory contract.
c. a composition agreement.
d. a satisfaction and accord.

14. On Monday, Sam agrees to mow Tony's lawn on Wednesday for $10. On Tuesday, Sam tells Tony that $10 will not be enough to mow the lawn. On Wednesday morning, Sam agrees to mow Tony's law for $15, which Tony promises to pay. After Sam mows the lawn, how much is Tony obligated to pay him?: a. $10, because the contract involved past consideration.
b. $10, because of the preexisting duty rule.
c. $15, because the preexisting duty rule does not apply.
d. $15, because the doctrine of preexisting duty does not apply to personal service contracts.

15. In exchange for Erica's promise to refrain from attending any rock concerts during her freshman year at Midwestern University, Erica's parents promise to give her $1,000 in cash. Is there an enforceable contract?: a. No, because Erica's promise represents an illusory promise.
b. No, because Erica's promise represents a moral obligation.
c. Yes, because Erica's promise constitutes legal detriment.
d. Yes, because Erica's promise constitutes past consideration.