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Exam 12: Consideration

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Question 1

Multiple Choice

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Frank offers to buy a guitar owned by Holly for twice what she paid for it. She accepts and hands the guitar to Frank. Holly's delivery of the guitar is

A) not consideration because its adequacy is unfair.
B) not consideration because the exchange is not a bargain.
C) consideration.
D) not consideration because the value is not legally sufficient.

E) A) and B)
F) A) and C)

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Question 2

True/False

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Consideration is the value given in return for a promise or in return or a performance.

A) True
B) False

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Question 3

Multiple Choice

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Jen promises to pay Kay $500 because "she does not have as much money as other people." Jen's promise is

Parties are not usually free to bargain as they wish.

With respect to consideration, a bargained-for exchange distinguishes a contract from a gift.

For the doctrine of promissory estoppel to be applied, there must be no clear or definite promise.

Adequacy of consideration refers to

In general, courts question the adequacy of consideration.

Dale's Uncle Ed tells Dale, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." Ed's promise is

Centre City Properties, Inc., owns and manages a warehouse. DIY Home Improvement Stores agrees to lease the warehouse for six years. Under the lease, DIY is obligated to pay all of the utility costs. Two years into the term, DIY asks Centre City to modify the lease to provide that the utility costs will be split equally between them. The landlord agrees, but later decides it does not want to share the costs and refuses to pay. Is Centre City bound to its agreement to share the utility costs? Why or why not?

Kris buys Liz's house for $300,000, which is the fair market value of the house. If the contract is later disputed in court, the court is likely to declare Kris's consideration

A preexisting duty may arise out of a previous contract.

Cindy, a real estate agent, sells her friend Doug's house without charging a commission. In return, Doug promises to give Cindy $1,000. This promise is not an enforceable contract because

The elements of consideration, in a bilateral contract for a sale of goods, are the sale and the goods.

A release enables recovery beyond that specified in its terms.

While sailboarding, Jolie is injured when Kirby carelessly crosses her path. Kirby's insurance company offers Jolie $50,000 to release Kirby from liability, and she accepts. Later, she learns that her injuries are more serious than she realized. The release is

Essentially, adequacy of consideration concerns the fairness of the bargain.

Brick and Candy are in an auto accident. Brick offers Candy $20,000 if she promises not to pursue any legal claim against Brick arising out of the accident. Candy agrees. This agreement is

Legal sufficiency of consideration is distinct from adequacy of consideration.

Apps Inc. promises to give stock options to Belden, a creative coder, for processes he has already designed. This promise is