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| 1 | |
If a promisor does not ask for anything in exchange, the promise is not enforceable. |
| | A) | True |
| | B) | False |
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| 2 | |
In order to be considered "consideration," a promise or act must have monetary (economic) value. |
| | A) | True |
| | B) | False |
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| 3 | |
If an agreement allows one party to cancel or terminate its contractual obligations, then that party has given an "illusory promise." |
| | A) | True |
| | B) | False |
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| 4 | |
In order to have a contract supported by consideration, both legal value and bargained-for exchange must be present. |
| | A) | True |
| | B) | False |
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| 5 | |
An agreement to refrain from pursuing a legal claim can be valid consideration to enforce a returned promise. |
| | A) | True |
| | B) | False |
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| 6 | |
Promissory estoppel may be used as a consideration substitute. |
| | A) | True |
| | B) | False |
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| 7 | |
Which of the following is an example of "consideration"? |
| | A) | Al promises to pay a certain sum of money to Bob in exchange for Bob's promise to wash Al's car. |
| | B) | John agrees not to sue Leo for personal injuries he suffered after Leo negligently ran his car into John's vehicle, in return for Leo's payment of $10,000. |
| | C) | Sue agrees not to drive over the speed limit in exchange for her father's promise to buy her a new car. |
| | D) | A and B |
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| 8 | |
In which of the following situations may consideration not be required to enforce the promise? |
| | A) | Work Station, an office supply retailer, promises ABC Corp. that it will deliver 100 reams of paper at $1.00 each by Friday. When ABC Corp. calls Work Station to cancel the order, Work Station offers to reduce the price to 50 cents per ream. |
| | B) | John promises to drive his friend, Diana, to Palm Springs so that she may attend a professional conference. Diana cancels her plane ticket on reliance of John's promise. John then informs Diana he will not drive her to Palm Springs. |
| | C) | Both A and B |
| | D) | Neither A nor B |
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| 9 | |
Which of the following is an example of an unenforceable promise due to lack of consideration (assume no additional facts)? |
| | A) | Bob owes Credit Cards Inc. $5,000. He calls Adam, an agent for Credit Cards, asking him to accept $1,000 as payment in full. Adam accepts. |
| | B) | Larry owes Steve $3,000. Steve agrees to accept $510 per month for six months as full payment. |
| | C) | Melody owes Lisa $500. Melody and Lisa dispute the validity of the debt. Not wishing to fight, Lisa accepts Melody's offer of $400 to settle the debt in full. |
| | D) | All of the above are examples of unenforceable promises due to lack of consideration. |
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| 10 | |
Bob agreed to sell Kim his $50,000 Porsche for only $10,000. Is this valid consideration? |
| | A) | No. There is no exchange of same or similar value. |
| | B) | No, unless Kim agrees to pay Bob an additional $40,000. |
| | C) | Yes. |
| | D) | Both A and B |
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