BLW Chapter 12

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Ida promises to pay Jon, her son, $15,000 if he obtains his degree at Kappa University, where he is currently in his second year. Jon graduates. Ida is

a. not required to pay, because Jon was already at Kappa.
b. not required to pay, because obtaining a degree benefits Jon.
c. required to pay, because a job can be hard to find after college.
d. required to pay, because Jon obtained a degree at Kappa.

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 ex-changed by the parties must be

a. adequately considerate.
b. equally valuable.
c. legally sufficient.
d. wisely priced.

Dave's Hobby Town and Eva's Yarn Shoppe are adjacent stores with adjoining parking lots. Dave offers Eva a discount on purchases from Dave's store if Eva will not tow the cars of Dave's customers who park in Eva's lot. Dave's discount is legally sufficient consideration

a. because it is a promise of something of value.
b. only if Dave adds a cash rebate.
c. only if Eva uses it.
d. under no circumstances.

Axel, the owner of Bar-B-Q Café, announces that he plans to paint its front fluorescent red. Cleo, the owner of Delicate Dress Shop next door, promises to pay Axel $1,000 to use a more conservative color. Axel agrees. Cleo's promise is

a. enforceable, because Axel agreed to refrain from doing something that he was legally entitled to do.
b. enforceable, because Axel would resent Cleo if she never paid.
c. unenforceable, because Axel agreed to refrain from doing some¬thing that he was legally entitled to do.
d. unenforceable, because Axel's color choice was offensive to Cleo.

Dave's Hobby Town and Eva's Yarn Shoppe are adjacent stores with adjoining parking lots. Dave offers Eva a discount on purchases from Dave's store if Eva will not tow the cars of Dave's customers who park in Eva's lot. Eva's forbearance from towing is legally sufficient consideration

a. because it is a promise of something of value.
b. only if Dave's customers park in Eva's lot.
c. only if Eva's customers cannot park in her lot because it is full.
d. under no circumstances.

Jill promises to pay Kyle $500 because "he does not have as much money as other people." Jill'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 Jill could have given more.
d. not enforceable because Kyle has not given consideration in return.

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. A court is most likely to evaluate the adequacy of consideration if

a. a thing exchanged has no intangible value to one of the parties.
b. something exchanged is not of direct economic or financial value.
c. the items exchanged were of unequal value.
d. there is a gross disparity in the value of the consideration exchanged.

Coverage, Inc. (CI), coordinates an insurance network that includes 1 million potential patients. By contracting with CI, a medical provider gains access to the network in exchange for accepting payments at lower than market rates. Doctors, Inc., contracts with CI but, when few patients are forthcoming, files a suit to recover the difference between the contract and market rates. The court will most likely rule that the contract is

a. enforceable because consideration is not required for this contract.
b. enforceable because the contract does not lack consideration.
c. not enforceable because Doctors received few patients.
d. not enforceable because the contract lacks consideration.

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. "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.

Jeff offers Kelly $1,000 for her three-year-old laptop computer. Kelly 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.

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. If, as Brad claims, the consideration in this problem is inadequate, it may indicate a lack of

a. accord in Brad's satisfaction with the value of the deal.
b. bargained-for exchange or mutual assent.
c. flexibility on the part of College Credit to accommodate Brad's needs.
d. "heft," "substance," or "weight" in the terms of the contract.

Quality Steel Corporation files a suit against Rite Tool Company, claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the consideration if

a. it is obvious that the consideration is adequate.
b. Rite Tool asserts that there is adequate consideration.
c. something of value passed between the parties.
d. the consideration is worth more than $100.

Digital Computers (DC) agrees to sell 100 hard drives to Eagle Computer Stores. Later, to obtain a higher profit, DC demands an extra $100 per drive to complete delivery. With no other source for DC drives, Eagle reluctantly agrees. Regarding this agreement, a court would likely

a. enforce it.
b. rescind it.
c. order the parties to renegotiate it.
d. not enforce it.

Applied Methods Corporation promises to give stock options to Brad, a production designer, for processes he has already designed. This promise is

a. enforceable because it is a new contract.
b. enforceable because it is an illusory promise.
c. enforceable because it is supported by past consideration.
d. unenforceable.

National Business Company and One-State Sales, Inc., agree to simultaneously rescind their contract and enter into a new agreement under which their duties are the same. National later sues One-State to enforce the new agreement. The court

a. may apply the preexisting rule or allow the rescission.
b. must allow the rescission.
c. must apply the preexisting duty rule.
d. must not apply the preexisting rule or allow the rescission.

Baked Goods Company agrees to supply Comida Café with all the corn chips that it re¬quires for a year. A sudden demand for ethanol results in a shortage of corn, and the price rises sharply. Baked Goods asks Comida to pay a higher price for the chips. This request is

a. invalid as an attempt at extortion or the so-called holdup game.
b. invalid under the preexisting duty rule.
c. valid as a risk ordinarily assumed in business.
d. valid due to the unforeseen difficulty of the sudden price increase.

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. If CCC offers no reason for the extra $100,000, but says only that it will otherwise stop construction, the agreement is

a. enforceable as an accord and satisfaction.
b. enforceable because of unforeseen difficulties.
c. unenforceable as an illusory promise.
d. unenforceable due to the preexisting duty rule.

Todos Ltd. agrees to supply United Steel, Inc., with minerals from Venezuela. When the government is unexpectedly overthrown in a revolution, Todos can obtain the goods only at a much higher price. United agrees to pay but later files a suit to recover the difference. The court will most likely rule that

a. a change in government is a risk ordinarily assumed in business.
b. an unforeseen difficulty supported the contract modification here.
c. Todos engaged in extortion or the so-called holdup game.
d. Todos had a preexisting duty to supply the goods at the initial price.

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. If CCC offers, as a reason for the extra $100,000, that ordinary business expenses have increased, the agreement is

a. enforceable as an accord and satisfaction.
b. enforceable because of unforeseen difficulties.
c. unenforceable as an illusory promise.
d. unenforceable due to the preexisting duty rule.

Superior-Plus Properties, Inc., and Topps Construction Company sign a contract that specifies the amount to be paid. Additional compensation may be justified by

a. any business risks that occur after the time of the contract.
b. changes in the market price of needed materials during the contract.
c. extraordinary difficulties unforeseen at the time of the contract.
d. no circumstances.

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. 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

a. enforceable as an accord and satisfaction.
b. enforceable because of unforeseen difficulties.
c. unenforceable as an illusory promise.
d. unenforceable due to the preexisting duty rule.

Sal 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, Sal changes her mind and again offers to deliver Tasty's products. Tasty is willing to deal, but for a new price. Sal 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.

Mary promises to pay her assistant Ned $10,000 in consideration of the services he provided over the years. Mary never pays Ned. Mary is

a. liable for payment of the $10,000.
b. liable only if Ned still works for Mary.
c. not liable, because the consideration is in the past.
d. not liable, because the consideration was unintentional.

Sal 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. Sal 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.

MicroCorp hires Nick to work for one month at a weekly salary of $400. A MicroCorp representative orally agrees two weeks later to double Nick's salary. This agreement is

a. enforceable because an employment contract is an adhesion contract.
b. enforceable because the parties have executed an accord and satisfaction.
c. unenforceable because Nick has incurred no additional detriment in ex¬change for MicroCorp's promise.
d. unenforceable because Nick's performance is uncertain.

Speedy Assembly Company promises its employees a 10-percent raise at the end of the year if productivity has increased and management feels it is warranted. Speedy must

a. do nothing.
b. give the employees a 10-percent raise only at the end of the year.
c. give the employees a 10-percent raise only if productivity increases.
d. give the employees a 10-percent raise under any circumstances.

General Credit Corporation's promise to pay its employees a year-end bonus "if it seems like a good idea at the time" is

a. an enforceable contract.
b. an illusory contract.
c. an unconscionable contract.
d. a unilateral contract.

Mei writes a check to Nat in an amount that represents half of her debt to him. On the back of the check, Mei includes the words "payment in full." Nat cashes the check. This discharges the entire debt

a. if the debt is liquidated.
b. if the debt is past due.
c. if the debt is unliquidated.
d. under no circumstances.

XL Retail Sales, Inc., promises its salaried employees a bonus at the end of the year if management thinks it is warranted. This promise is

a. enforceable.
b. unenforceable because it is not supported by consideration.
c. unenforceable because the dollar amount is missing.
d. unenforceable because the employees are paid salaries.

George and Holly disagree as to the exact amount one owes the other. They form a new agreement that, on fulfillment, will discharge the prior obligation. This is

a. a covenant not to sue.
b. an accord and satisfaction.
c. a release.
d. promissory estoppel.

Ann is injured in an accident caused by Bob. Bob agrees to pay Ann $2,500 if she agrees to release Bob from further liability. Ann agrees. If Ann's damages ultimately exceed $2,500, Ann can

a. collect the balance from Bob in a breach-of-contract suit.
b. collect the balance from Bob in a tort suit.
c. collect the balance from Bob on the ground of unforeseen difficulties.
d. not collect the balance from Bob.

Dag and Enita are in an auto accident. Dag offers B $2,000 if Enita promises not to pursue her potential legal claim against Dag. Enita agrees. Later, Enita discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injury. The agreement between Dag and Enita is

a. a covenant not to sue.
b. an accord and satisfaction.
c. a release.
d. promissory estoppel.

After an accident with a driver for General Transport Company (GTC), Paul signs a covenant not to sue GTC for damages in a tort action if it pays for the damage to his car. This covenant

a. bars recovery only if GTC pays.
b. is an illusory contract.
c. is barred by the preexisting duty rule.
d. is unconscionable.

Dag and Enita are in an auto accident. Dag offers B $2,000 if Enita promises not to pursue her potential legal claim against Dag. Enita agrees. Later, Enita discovers that it will cost $1,500 to repair her car and $4,000 to cover the medical expenses for a latent injury. In Enita's suit against Dag to recover her repair and medical expenses, Enita will most likely recover

a. half the amount to pay those costs over what Dag already paid Enita.
b. nothing.
c. the estimated amount to pay those costs and any other liability.
d. the exact amount to pay those costs and no more.

Collection of EZ Sales Company's debt to First Storage Corporation is barred by a statute of limitations. A new promise by EZ to pay the debt

a. may become enforceable if payments are made.
b. must be in writing.
c. requires consideration.
d. will not revive the obligation.

Quinn promises to sell his recreational vehicle (RV) to Sid, who builds a structure behind his house in which to keep it. Quinn's later attempt to renege on the promise is

a. effective if Quinn did not ask Sid to build anything.
b. effective if Quinn wants to sell the RV to someone else.
c. not effective if Sid cannot obtain a similar RV for a similar price.
d. not effective if Sid detrimentally relied on Quinn's promise.

Auto Body Repair Shop (ABRS) promises to pay Ben $1,000 a week to work for ABRS. Ben accepts and quits his job with Car Care Service. ABRS fails to provide a job for Ben. Ben has a cause of action based on

a. an illusory promise.
b. a release.
c. past consideration.
d. promissory estoppel.

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

a. Milo justifiably refused to fulfill a promise to National.
b. Milo justifiably relied on National's promise to his detriment.
c. National justifiably refused to fulfill a promise to Milo.
d. National justifiably relied on Milo's promise to its detriment.

Betty pledges to donate $1,000 to the Children's Hospital. On the basis of the pledge, the hospital orders additional equipment. Betty reneges on the pledge. The hospital sues Betty. If the court enforces the pledge, it will be

a. because Betty's performance is uncertain.
b. because of the unforeseen difficulties.
c. because the pledge is a gift.
d. under the doctrine of promissory estoppel.

Carl pledges $1,000 to the Disaster Relief Organization (DRO). On the basis of the pledge, DRO orders additional rescue equipment. Carl fails to pay. In DRO's suit, a court may enforce the pledge

a. according to the preexisting duty rule.
b. as an illusory promise supported by past consideration.
c. on a theory of accord and satisfaction.
d. under the doctrine of promissory estoppel.

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