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Exam 12: Consideration

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Question 21

Multiple Choice

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Excavation Inc. begins digging a foundation for Financial Investment Company under a contract for a certain price. After six months, Excavation demands a higher price because of extraordinary difficulties that were totally unforeseen at the time the contract was formed. An agreement to pay the higher price is

A) enforceable as the consideration is past.
B) enforceable due to unforeseen difficulties.
C) unenforceable as an illusory promise.
D) unenforceable due to the preexisting duty rule.

E) A) and B)
F) None of the above

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Question 22

True/False

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An accord and satisfaction is an agreement in which one party gives up the right to pursue a legal claim against another party.

A) True
B) False

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Question 23

Multiple Choice

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Marketing Solutions Inc. promises to employ Niki as a software engineer. In reliance on the promise, Niki quits her job with Online Ad Agency, but Marketing Solutions does not hire her. Most likely, Marketing Solutions is

If a person expresses contract terms with such uncertainty that the terms are not definite, the promise is illusory but the deal is enforceable.

Sean promises to pay his personal assistant Terry $50,000 in consideration of the services she provided over the years. Sean never makes the payment. Sean's promise is

Normally, a court will evaluate the adequacy of consideration based solely on the comparative value of the things exchanged as part of agreement.

To constitute consideration, there must be

Exceptions to the preexisting duty rule include unforeseen difficulties.

Allen promises to pay Barb, his niece, $5,000 if she obtains her degree at City University, where she is in her third year. Barb graduates. Allen must pay Barb because

Situations in which agreements lack consideration include those involving a preexisting duty.

Gwen is indebted to Home Loan Company for $75,000. Gwen agrees to pay, and Home Loan agrees to accept, a lesser amount than the lender originally claimed was owed. The performance of this agreement is

Under a contract with Soybean Farms, Tai begins grading a terraced hillside for planting. Halfway through the project, Tai asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." The farm agrees but later refuses to pay. The agreement to pay more is

Cloud Storage Inc. promises to pay its employees a year-end bonus "if profits continue to be high and management agrees at the time." This is

A preexisting duty may be imposed by law.

Sports Bar and Tasty Bakery are adjacent businesses with adjoining parking lots. Sports Bar offers Tasty a discount on purchases if the bakery will not tow the cars of Sports Bar's patrons who park in the bakery's lot. The discount is legally sufficient consideration

Painting a garage can constitute "something of legally sufficient value."

Consideration refers to the time that a party takes to evaluate a deal.

Onsite Restoration Inc. begins renovating houses for Property Company under a contract for a stated amount per house. After six months, Onsite demands an extra $20,000 per house, stating no reason for the extra $20,000, but asserting that it will stop work if it is not paid. The agreement is

Adequacy of consideration refers to "how much" consideration is given.

To pay on receipt of certain goods is "something of legally sufficient value."