Contracts Chapter 11 Flashcards

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Questions and Answers

What is Bob's promise regarding house checks?

To drive by the house and check on it during his off-duty time.

Smith's promise to pay Joe an increased amount is enforceable because:

This is a valid settlement of a liquidated debt.

This is an unforeseen circumstance. (correct)

This is a novation.

This is a Uniform Commercial Code modification.

This is a preexisting duty.

Ralph's agreement not to sue after receiving $10,000 represents what kind of debt?

A liquidated debt.

B and C only.

An accord and satisfaction.

An unliquidated debt. (correct)

A and C only.

If Mary changes her mind about giving her car, the court will most likely:

Require Mary to pay damages to the friend for any loss he incurred in connection with Mary not keeping her promise. Signup and view all the answers

In order for a contract to be valid, it must contain what?

An offer, acceptance, and consideration Signup and view all the answers

Consideration can best be described as:

Something of legal value Signup and view all the answers

An agreement that is lacking consideration:

Is not enforceable, but can be voluntarily performed Signup and view all the answers

Which of the following can be considered consideration?

A, B, and C Signup and view all the answers

In a two-party contract, which is true about consideration?

Each party must either receive a benefit or suffer a legal detriment Signup and view all the answers

Legal detriment in the context of consideration means:

Giving up an existing legal right or taking on a new legal duty Signup and view all the answers

To meet the contractual requirement, consideration must be:

Bargained-for and involve a legal detriment to each party Signup and view all the answers

A promise to deliver merchandise in the future:

Is consideration because it involves a new legal duty Signup and view all the answers

The requirement that consideration be bargained-for means that:

The inducement for each party to give consideration was the consideration of the other party Signup and view all the answers

A promise to refrain from underage drinking in exchange for $10,000:

Is not enforceable, as the consideration is illegal Signup and view all the answers

An illusory promise is:

One that a party has to perform if he or she chooses to do so Signup and view all the answers

When a seller promises a buyer to sell all of an item that it produces, this results in:

An enforceable output contract Signup and view all the answers

Which of the following constitutes legal consideration?

A promise based upon a change in duties and payments Signup and view all the answers

Which of the following most likely constitutes legal consideration?

A promise to buy all that the promisor needs of an item without specifying a minimum quantity Signup and view all the answers

If Sam, a high school senior, promises to go to school every day in exchange for an 'A' in his history class, his promise will most likely:

Be found to lack consideration as he had a preexisting duty to attend school Signup and view all the answers

An agreement to settle an earlier contract that was in dispute is:

An accord and satisfaction Signup and view all the answers

Two friends, Ann and Mary, are having margaritas at happy hour. Ann says, 'I will pay for everything tonight including your drinks.' If Ann later changes her mind, a court would likely:

Not require Ann to follow through on the promise because it was a gratuitous promise Signup and view all the answers

Jean sold her car undervalued and wants to return $500 to the purchaser to get her car back. The likely outcome is:

Not get her car back because the court would not inquire into the difference in the value of the consideration Signup and view all the answers

Seasonal Selections, Inc. enters a contract to purchase all balsam fir tree boughs it needs. This contract is:

A requirements contract Signup and view all the answers

Lode Mines has a contract with Ajax Photo Labs for purchasing all requirements of silver. If Ajax orders additional silver after prices rise, the most likely outcome is:

Lode wins; even if requirements contracts are enforceable, the parties must act in 'good faith', and Ajax is acting in bad faith Signup and view all the answers

Regarding the sale of an extra 100 units requested by Buyer, Seller says he will sell them if he doesn't sell to other customers. What is true?

There is no consideration due to an illusory promise Signup and view all the answers

Lisa enters into a contract for groceries 'as she determines appropriate in the future'. This is an example of:

An illusory promise by Lisa Signup and view all the answers

Worldwide Motor Company enters a contract with Good Tire Co. allowing cancellation at any time. This contract is:

Unenforceable, because Worldwide's promise is illusory and there is no mutuality of obligation Signup and view all the answers

Frieda offered a security officer $100 to resolve a problem. Is there sufficient consideration?

No, because one of the parties did not suffer legal detriment Signup and view all the answers

Caterer agreed to cater a wedding for $12 per plate but then requested $16. Which is true?

The $16 is not enforceable because of a preexisting duty Signup and view all the answers

Ricky, a basketball player, demands an additional $5,000 per game. Most likely:

Owner wins; Ricky was under a prior duty to play basketball, so Ricky's new promise is not supported by consideration Signup and view all the answers

Cheryl promised a $4,000 bonus to her builder after the job is done. What is most likely the result?

Cheryl wins; the promise is based on past consideration Signup and view all the answers

Frank's boss promises him a $1,000 bonus for past work. Is the company obligated to pay?

The company is not obligated to pay him because the consideration is past consideration Signup and view all the answers

In which of the following situations have both parties given consideration to support a contract?

Pat, an accounting professor, agrees to tutor one of her students in the study of French for $10 per hour Signup and view all the answers

In which of the following situations is there adequate consideration on the part of the promisor to support enforcement of a contract?

LBM Corporation promises to pay Fred $2,000 a month during retirement due to his dedication Signup and view all the answers

Study Notes

Contract Validity

A valid contract requires an offer, acceptance, and consideration.
Contracts must be enforceable and include mutual obligations.

Consideration

Consideration is defined as something of legal value, essential for contract enforceability.
Consideration can include promises of future services, cash payments, or actual performance of services.
An agreement lacking consideration is not enforceable but may be voluntarily performed.

Legal Detriment

Legal detriment occurs when one party gives up an existing legal right or assumes a new legal duty.
Each party in a contract typically suffers a legal detriment.

Types of Contracts

Output contracts: Committing to sell all produced goods to one buyer.
Requirements contracts: A promise to purchase all needs from a seller, highlighting mutual obligations.

Past Consideration

Past consideration involves actions completed before a new promise and is generally not valid for contract enforcement.
Promises based on past actions cannot serve as valid consideration in contracts.

Illusory Promises

An illusory promise lacks obligation and thus does not meet the consideration requirement.
Contracts lacking mutuality or clear obligations can be deemed unenforceable.

Modification of Contracts

Modifications to contracts require new consideration unless unforeseen circumstances justify the change.
Preexisting duties cannot be used as valid consideration for contract modifications.

Enforceability Issues

Gratitude without consideration leads to non-enforceable agreements.
Courts typically do not inquire into equitable values as long as legal obligations are met.

Obligations in Agreements

Legitimate contractual obligations require mutual benefit and consideration.
Agreements without legal detriment are often unenforceable, regardless of other factors.

Legal Context

Promises that fall into categories of gifts or are subject to conditions like past actions are not enforceable.
The existence of a valid contract is determined by whether both parties have contributed lawful consideration.

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Description

This quiz focuses on the fundamental concepts of contracts as outlined in Chapter 11. It covers key elements necessary for a contract to be valid, as well as the concept of consideration. Test your understanding of these essential legal principles.