Business Law Final Chpt 12

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B

Often, consideration is broken down into these two parts:
a. there is a sufficient reason for making the promise and legally sufficient value is given.
b. there is a bargained-for exchange and legally sufficient value is given.
c. legally sufficient value is given and a forbearance is promised.
d. All of these choices.

D

Something of legally sufficient value may consist of:
a. refraining from an action that one has a legal right to undertake.
b. performance of an action that is not obligated.
c. promise to do something that one has no prior legal duty to do.
d. All of these choices.

C

Consideration, in:
a. bilateral contracts, normally consists of a promise in return for a performance.
b. unilateral contracts, in the matrix of things is made up of some performance in return for a performance.
c. normally bilateral contracts, consists of a promise in return for a promise.
d. unilateral contracts, usually are composed of something of sufficient value given as a gift.

C

Consideration is deemed adequate:
a. when at least one of the parties involved says that the consideration is sufficient.
b. by the court aside from the opinions of the parties involved.
c. when there's an exchange of promises and potential benefits.
d. even when there is a gross disparity in the amount of value of the consideration exchanged.

B

Adequacy of consideration involves:
a. a limit to the degree of fraud involved.
b. the fairness of the bargain.
c. duress or due influence.
d. the contractual capacity of the parties.

D

A contract declared unenforceable because it is unconscionable:
a. rules out the possibility of undue influence.
b. usually results in the court asking the parties to decide what values are involved.
c. means there was a serious lack of agreement.
d. generally means it is clearly unfair

A

A duty that binds a party can:
a. not serve as consideration for a second contract.
b. constitute legally sufficient consideration for further contracts if they are in the same line of work.
c. serve as consideration for an additional contract if the parties are willing to rescind the additional contract.
d. constitute legally sufficient consideration for an additional contract if it is part of the same project.

C

If promises are given to perform actions that have taken place already they:
a. are called rescissions.
b. include sufficient consideration.
c. are unenforceable.
d. are legally sufficient.

B

A promise is said to be illusory:
a. if it is not a promise to do what has already been done.
b. as long as the promisor has made no definite promise to do something specific.
c. when difficulties that arise unexpectedly involve the type of risks ordinarily assumed in that line of business.
d. as long as the promisee has received some definite, specific, legally sufficient consideration.

D

The concept of accord and satisfaction involves a(an):
a. contract in which one party forfeits the right to pursue a legal claim against the other; baring any further recovery beyond the terms stated in the release.
b. agreement to substitute an equal contractual obligation for some other type of legal action based on a valid claim.
c. contract specifying recovery beyond terms stated in any release.
d. None of these choices.

B

The opposite of a liquidated debt is:
a. a contract in which one party forfeits the right to pursue a legal claim against the other party.
b. one in which all parties agree on what the debt amounts to and how it will be repaid.
c. a covenant not to sue.
d. None of these choices.

B

A debt that has been ascertained, fixed, agreed on, and settled is:
a. when accord and satisfaction occur.
b. a liquidated debt.
c. a covenant not to sue.
d. an unliquidated debt.

B

Requirements to state a claim for promissory estoppel do not include:
a. the promisee's reliance was definite and resulted in substantial detriment.
b. enforcement of the promise being necessary to avoid injustice.
c. the promisor should have expected that the promisee would rely on the promise.
d. there is a clear and definite promise.

D

If a promisee's reliance on a promisor's definite offer resulted in a substantial detriment to the promisee, it:
a. thereby qualifies as being supported by legally sufficient consideration.
b. cannot be enforced.
c. is covered by the doctrine of promissory estoppel.
d. might be covered because in induced detrimental reliance.

C

The modern view concerning charitable subscriptions is:
a. to rule out exceptions to the general rule that they are unenforceable because they are unsupported by legally sufficient consideration.
b. that the debt is implied if the debtor avoids acknowledging the debt by making a partial donation or payment.
c. to make exceptions to the general rule by applying the doctrine of promissory estoppel.
d. that the subscription is unenforceable as long as the promisee reasonably relied on the promise by refraining from some act.

Legal Sufficient Value

First element of consideration; the promise, performance, or forbearance.
Hamer v. Sidway. Is giving up drinking, smoking, swearing, and playing cards ....?

Bargained-for-Exchange

The second element of consideration: Must provide basis for the bargain. Something of legal value (a promise, or a performance) must be exchanged between the parties. The promise must either be: legally detrimental to the promisee or legally beneficial to the promisor.

Adequacy of Consideration

this concerns the fairness of the bargain and how much consideration is given. Ex. law does not protect a person from entering into an unwise contract. Cases of "shocking inadequate consideration" may raise a red flags, and be rules unconscionable.

Preexisting Duty

promise to do what one already has a legal duty to do does not constitute legally sufficient consideration. Exceptions: unforeseen difficulties, recession and new contract.

Past Consideration

is no consideration because the bargained-for-exchange element is missing. These are promises made in return for actions or events that have already taken place are unenforceable.

Illusory Promises

promisor has not definitely promised to do anything (no promise at all). Option-to-cancel clauses. Requirements and Output contracts

Settlement of Claims

accord and satisfaction: debtor offers to pay a lesser amount than the creditor purports to be owed. liquidated debt and unliquidated debt.

Liquidated Debt

this means that accord and satisfaction cannot take place. amount has been ascertained, fixed, agreed on, settled, or exactly determined.

Unliquidated debt

parties give up legal right to contest the amount in dispute, and thus consideration is given. Acceptance of payment of a lesser sum operates as satisfaction or discharge, of the debt because there is valid consideration

Release

in which one party forfeits the right to pursue a legal claim against the other party. In settlement of claims the ... bars any further recovery beyond the terms stated in the ...

Covenant not to sue

this does not always bar further recovery. The parties simply substitute a contractual obligation for some other type of legal action based on a valid claim.

Promissory Estoppel

detrimental reliance : recovery if reliance on promise of another.

State a Claim

Exceptions to the consideration requirement: Requirements to .... : must be definite promise, promisee must justifiably rely on the promise, reliance is substantial, justice will be served by enforcing promise.

Promissory Estoppel

Exceptions to the consideration requirement: Application of the .... courts began to apply estoppel to hardship or inequitable cases. A person who has reasonably and substantially relied on the promise of another may be able to obtain some measure of recovery

Promises to Pay Debt Barred ...

Statutes of Limitations ... A promise by a debtor to pay a previous debt barred by the statute of limitations is enforceable- no additional consideration is necessary.

Charitable Subscriptions

generally, enforceable, but courts now rely on promissory estoppel if reliance.

B

Refraining from an action that one has a legal right to undertake is:
a. a promise to do something that one has no prior legal duty to do.
b. forbearance.
c. not of legally sufficient value.
d. nothing in return for a performance.

A

Bargained-for exchanges in contracts are distinguished from gifts by:
a. the party receiving something of value is expected to do something in order to receive it as would not be the case with a gift.
b. for the action to be a gift, the receiver has to make some performance or promise to do something in response.
c. the offeror is expected to do nothing in order to obtain some bargained-for exchange.
d. the party receiving something of value is not expected to do something in order to receive it just as would be the case with a gift.

C

For there to be a contract:
a. the promisee must provide a performance that induces the offeror to return a promise.
b. there must be a gift.
c. the promisor must induce the promisee to return some performance or offer of a promise that is accepted.
d. the offeree must return the item of legal value.

A

Courts leave it up to the parties to decide what something is worth:
a. under the doctrine of freedom of contract.
b. since only they truly know what the values involved are.
c. because proceedings would be lengthened greatly by bringing in experts to make the determination.
d. under the doctrine of quantum meruit.

D

Legal sufficiency:
a. leads the courts, if the value involved is significant, to refrain from considerations of contractual capacity.
b. is equivalent to economic sufficiency.
c. leads the courts, if the value involved is insignificant, to considerations of contractual capacity.
d. does not necessarily mean people should be saved by courts from making a bad bargain.

C

Making sure there was no defect in mutual assent is the duty of:
a. the police.
b. federal administrative agencies.
c. the courts.
d. state administrative agencies.

C

In respect to past consideration, the rule is:
a. past consideration is valid as long as the promisee is over eighteen years of age.
b. promises made in return for actions that have already taken place are enforceable because they include the element of bargained-for exchange.
c. a past consideration is no consideration.
d. None of these choices

B

Two parties can mutually agree to rescind their contract:
a. if it is not an implied-in-fact contract.
b. to the extent it is executory.
c. if the contract is not unilateral.
d. to the extent that it is executed.

B

Agreements that lack consideration:
a. include those that let a party cancel the contract before performance has been completed.
b. include promises made in return for actions that have already taken place and agreements based on consideration that already has been given.
c. contain the element of bargained-for exchange.
d. include those based on promises to perform specific services and others that allow a party to cancel out before performance has begun.

C

A contract in which one party forfeits the right to pursue a legal claim against the other is a:
a. liquidation of debts.
b. covenant not to sue.
c. release settlement.
d. bargained-for-exchange.

B

A covenant not to sue:
a. is the same as an unliquidated debt.
b. does not always bar further recovery.
c. is an agreement to avoid any obligation for some other type of legal action based on a valid claim.
d. None of these choices.

D

For this to occur, the amount of the debt must be in dispute:
a. a covenant not to sue.
b. a release contract.
c. accord and promise of payment.
d. None of these choices.

C

If a creditor fails to sue within a period of time specified by a state, recovery of the debt is:
a. enforceable under the doctrine of promissory estoppel.
b. barred by promissory estoppel.
c. barred by that statute of limitations.
d. allowed if a creditor submits the usual petition

C

Subscriptions to charitable institutions:
a. traditionally are unenforceable because they are supported by legally sufficient consideration.
b. are promises made by contract.
c. traditionally have been unenforceable.
d. None of these choices.

C

Pledges to contribute money to build an organization's new facility:

a. may constitute a lack of contractual capacity.
b. can never be enforced despite any detriment to the organization.
c. may constitute consideration when accepted by the organization that thereby impliedly promises to complete the building.
d. can never be considered clear and definite promises.

B

In contract law, "consideration" refers to the courtesy that one party shows another in negotiating a deal.
a. True
b. False

B

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

B

Courts typically consider the adequacy of consideration.
a. True
b. False

A

A contract that one party retains the exclusive right to cancel at any time is unenforceable.
a. True
b. False

B

A covenant not to sue is against public policy.
a. True
b. False

A

Kelsey promises to pay Jon, her son, $15,000 if he obtains his degree at Ivy University, where he is currently in his second year. Jon graduates. Kelsey is
a. required to pay, because Jon obtained a degree at Ivy.
b. not required to pay, because Jon was already at Ivy.
c. not required to pay, because obtaining a degree benefits Jon.
d. required to pay, because a job can be hard to find after college

D

Jen questions whether there is consideration for her contract with Isaac to exchange her catering services for his payment of a certain amount. To constitute consideration, the value of whatever is exchanged must be
a. objectively worthy.
b. practically sound.
c. grossly inadequate.
d. legally sufficient.

D

Under a contract with Bucolic Farms, Agro Excavation, Inc., begins digging an agricultural pond. In mid-project, Agro asks for $15,000 over the contract price, claiming an increase in the "cost of doing business." Bucolic agrees but later refuses to pay. Their agreement is
a. unenforceable because its performance is unforeseeably difficult.
b. unenforceable because Bucolic's promise was illusory.
c. enforceable.
d. unenforceable because Agro's performance was a preexisting duty.

B

Cherry is injured in an accident caused by Bronco. Bronco agrees to pay Cherry $2,500 if she agrees to release him from further liability. Cherry agrees. If Cherry's damages ultimately exceed $2,500, she can
a. collect the balance from Bronco in a tort suit.
b. not collect the balance from Bronco.
c. collect the balance from Bronco on the ground of unforeseen events.
d. collect the balance from Bronco in a breach-of-contract suit.

B

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

Legally Sufficient Value

may consists of a promise to do something that one has no prior legal duty to do. ... et.al.

Legally Sufficient Value

may consists of the performance of an action that one is otherwise not obligated to undertake

Forbearance

one of the principles of legally sufficient value, the refraining from an action that one has a legal right to undertake.

Legally sufficiency of consideration

involves the requirement that consideration be something of legally sufficient value in the eyes of the law. Adequacy of consideration involves how much consideration is given (the fairness of the bargain)

Illusory

without consideration and unenforceable. a promise is this when it fails to bind the promisor.

Option-to-Cancel Clauses

sometimes these present problems in regard to consideration. When the promisor has the option to cancel the contract before performance has begun, then the promise is illusory

Accord

the agreement under which one of the parties undertakes to give or perform, and the other to accept in satisfaction of a claim, something other than that on which the parties originally agreed.

Satisfaction

is the performance that takes place after the accord is executed. A

Accord and Satisfaction

a debtor offers to pay, and a creditor accepts, a lesser amount than the creditor originally claimed was owed. in order for these to occur, the amount of the debt must be in dispute.

Releases

will generally be binding if: they are given in good faith, stated in signed writing (which is required in many states), and accompanied by consideration.

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