Question 1

An illusory promise is valid consideration.

Accepted Answer

A) True 
 B)False

Question 2

Section 2-306 of the UCC expressly disallows output contracts in the sale of goods.

Accepted Answer

A) True 
 B)False

Question 3

Bailey Co. and Spryt Bros. enter into a contract for the manufacture and sale of 400 lawn chairs. If both parties agree that a modification is necessary,

Accepted Answer

A)   the surest way to modify the contract is to liquidate it.
B)   they may not do so without court supervision.
C)   an agreement to rescind the contract will terminate the contractual rights of Bailey Co. and Spryt Bros. if neither of them had completed their obligations.
D)   courts will generally not enforce a cancellation and modification of a contract unless one party received inadequate consideration under the original contract.E) A) and D)
F) B) and C)

Question 4

The two basic elements of consideration are intention and agreement.

Accepted Answer

A) True 
 B)False

Question 5

Contracts in which one party agrees in good faith to buy all his requirements of certain goods from the other party are generally unenforceable because there is no definite amount.

Accepted Answer

A) True 
 B)False

Question 6

What two exceptions did the UCC create for accord and satisfaction check cases?

Accepted Answer

The first Code exception involves "organizations" which receive potentially thousands of checks every day and cannot inspect all notations. Under the exception, if an organization notifies a debtor that any offers to settle for less than the debt claimed must be made to a particular official, and the check is sent to anyone else in the organization, depositing a "full settlement" check generally does not create an accord and satisfaction. Second, if within 90 days of cashing a "full payment" check, the creditor offers repayment of the same amount to the debtor, there is no accord and satisfaction.

Question 7

Jamie is building a house on her lot. She invites Earnie of Earnie's Excavation to bid on the excavation job. Earnie observes that the lot next to Jamie's is also under excavation and the soil in that lot is normal and not excessively rocky. Based on the assumption that the soil in Jamie's lot will be similar, he and Jamie agree that the excavation will cost $3,000. When Earnie starts digging, he learns there is solid rock under Jamie's lot. Earnie says it will cost an extra $2,500 for the excavation work. Jamie agrees just to get the job done but later refuses to pay a dime more than $3,000. If Earnie sues, the most likely result would be

Accepted Answer

A)   Jamie wins, as Earnie was under a preexisting duty to dig the basement.
B)   Earnie wins, as this modification is governed by the UCC and consideration is not required to enforce a modification of the agreement.
C)   Jamie wins, as Earnie was not acting in good faith and just wanted to put Jamie in a situation where she didn't have a choice but to agree to more money.
D)   Earnie wins, as the modification was due to unforeseen difficulties.E) B) and C)
F) B) and D)

Question 8

In January, Alex promised to pay Y-K Inc. $5,000 if it would refrain from filing suit against him on a breach of contract action. Y-K agreed and accepted a $5,000 check from Alex. Which of the following statements is correct?

Accepted Answer

A)   Y-K's promise to refrain from suing Alex was not supported by legal consideration.
B)   Y-K's promise to refrain from suing Alex was supported by legal consideration and is enforceable.
C)   This is an accord and satisfaction, and Y-K cannot sue.
D)   The courts would apply promissory estoppel in this situation.E) All of the above
F) C) and D)

Question 9

An agreement to settle a debt for less than the sum claimed is referred to as

Accepted Answer

A)   a promissory estoppel.
B)   an accord.
C)   a satisfaction.
D)   rescission.E) B) and D)
F) B) and C)

Question 10

If Crosby and Dash are in disagreement as to the exact amount of money that Crosby owes Dash, then they may choose to form a new agreement at a set amount. If they both perform the new agreement, their conduct would be an example of

Accepted Answer

A)   a rescission.
B)   a contract modification.
C)   a preexisting duty.
D)   an accord and satisfaction.E) A) and B)
F) A) and C)

Question 11

A promise to do (or not do) something in the future counts as consideration.

Accepted Answer

A) True 
 B)False

Question 12

What is an output contract?

Accepted Answer

A)   A contract in which a buyer agrees to purchase all of his or her goods from one seller.
B)   A contract between a manufacturer and a distributor where the distributor only buys from the manufacturer and is contractually prevented from trading with the manufacturer's competitors
C)   A contract in which the seller guarantees to sell all of its output to one buyer, and the buyer agrees to accept the entire quantity.
D)   A contract in which a seller agrees to sell a product or service to the buyer only on the condition that the buyer also purchases an additional product from the seller.E) None of the above
F) All of the above

Question 13

Juan agrees to paint Michelle's house for $1,000. Halfway through the job, Juan tells Michelle that he will need an extra $250 to finish the job. Which of the following is a correct evaluation of the situation?

Accepted Answer

A)   Michelle will have to pay because she and Juan did not have a bargained-for exchange.
B)   Michelle will have to pay the extra $250 because Juan has promised not to finish the job unless she does.
C)   Michelle will not have to pay the extra $250 because Juan made an illusory promise about only charging $1,000.
D)   Michelle will not have to pay the extra $250 because Juan has a preexisting duty to paint the house for $1,000.E) None of the above
F) A) and D)

Question 14

The UCC requires consideration for agreements modifying contracts for the sale of goods.

Accepted Answer

A) True 
 B)False

Question 15

Marco agrees to sell Clowns R Us some balloons. The contract states that Clowns may buy as many balloons as it wishes. This agreement is

Accepted Answer

A)   a requirements contract.
B)   an output contract.
C)   an illusory contract.
D)   an enforceable contract.E) A) and B)
F) B) and D)

Question 16

Billy owes a liquidated debt of $3,000 to Rayna, his personal weight trainer. Billy sends Rayna a check for $300 on which he has marked, "Payment in Full." If Rayna cashes the check she will NOT be able to successfully sue Billy for the remainder of the debt.

Accepted Answer

A) True 
 B)False

Question 17

Mary owes $3,800 on her credit card. She sends the credit card company a check for $800 with the notation "payment in full" on the check. If the credit card issuer cashes the check,

Accepted Answer

A)   Mary's balance will automatically be paid in full if the $3,800 amount was a liquidated debt.
B)   Mary's balance will automatically be paid in full regardless of whether the amount of $3,800 was liquidated or unliquidated.
C)   the check may be subject to a UCC exception to the general rules for accord and satisfaction cases involving checks.
D)   Mary's balance will automatically be paid in full if the $3,800 amount was an unliquidated debt.E) C) and D)
F) B) and D) C

Question 18

Mid-American Oil had a contract with NSB Company to supply 1,000 gallons of oil by September 1. The contract contained a provision that required all modifications to be written and signed by the company presidents. In early August, an executive of Mid-American talked with the purchasing agent of NSB who orally agreed to two shipments of oil; one in September and the second one in December. By September 30, when only 500 gallons had been delivered, NSB sued. The likely outcome of this lawsuit is:

Accepted Answer

A)   NSB wins because the modification was not supported by new consideration.
B)   NSB wins because the modification has to be in writing.
C)   Mid-American Oil wins because the UCC governs this case and no new consideration is required.
D)   Mid-American Oil wins because new consideration was present.E) B) and C)
F) None of the above

Question 19

Hilda owes Lex $3,000, which is an undisputed amount. If she offers him her car in full settlement of the debt and he accepts, the agreement is binding and he can no longer claim she owes him anything on the original debt.

Accepted Answer

A) True 
 B)False  True

Question 20

A forbearance is, in essence, the opposite of an act.

Accepted Answer

A) True 
 B)False

Exam 13: Consideration

An illusory promise is valid consideration.

Correct Answer
verified

Section 2-306 of the UCC expressly disallows output contracts in the sale of goods.

Correct Answer
verified

Bailey Co. and Spryt Bros. enter into a contract for the manufacture and sale of 400 lawn chairs. If both parties agree that a modification is necessary,

Correct Answer
verified

The two basic elements of consideration are intention and agreement.

Correct Answer
verified

Contracts in which one party agrees in good faith to buy all his requirements of certain goods from the other party are generally unenforceable because there is no definite amount.

Correct Answer
verified

What two exceptions did the UCC create for accord and satisfaction check cases?

Correct Answer
verified

In January, Alex promised to pay Y-K Inc. $5,000 if it would refrain from filing suit against him on a breach of contract action. Y-K agreed and accepted a $5,000 check from Alex. Which of the following statements is correct?

Correct Answer
verified

An agreement to settle a debt for less than the sum claimed is referred to as

Correct Answer
verified

If Crosby and Dash are in disagreement as to the exact amount of money that Crosby owes Dash, then they may choose to form a new agreement at a set amount. If they both perform the new agreement, their conduct would be an example of

Correct Answer
verified

A promise to do (or not do) something in the future counts as consideration.

Correct Answer
verified

What is an output contract?

Correct Answer
verified

Juan agrees to paint Michelle's house for $1,000. Halfway through the job, Juan tells Michelle that he will need an extra $250 to finish the job. Which of the following is a correct evaluation of the situation?

Correct Answer
verified

The UCC requires consideration for agreements modifying contracts for the sale of goods.

Correct Answer
verified

Marco agrees to sell Clowns R Us some balloons. The contract states that Clowns may buy as many balloons as it wishes. This agreement is

Correct Answer
verified

Billy owes a liquidated debt of $3,000 to Rayna, his personal weight trainer. Billy sends Rayna a check for $300 on which he has marked, "Payment in Full." If Rayna cashes the check she will NOT be able to successfully sue Billy for the remainder of the debt.

Correct Answer
verified

Mary owes $3,800 on her credit card. She sends the credit card company a check for $800 with the notation "payment in full" on the check. If the credit card issuer cashes the check,

Correct Answer
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C

Correct Answer
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Hilda owes Lex $3,000, which is an undisputed amount. If she offers him her car in full settlement of the debt and he accepts, the agreement is binding and he can no longer claim she owes him anything on the original debt.

Correct Answer
verified
True

A forbearance is, in essence, the opposite of an act.

Correct Answer
verified

Exam 13: Consideration

An illusory promise is valid consideration.

Correct AnswerverifiedShow Answer

Section 2-306 of the UCC expressly disallows output contracts in the sale of goods.

Correct AnswerverifiedShow Answer

Bailey Co. and Spryt Bros. enter into a contract for the manufacture and sale of 400 lawn chairs. If both parties agree that a modification is necessary,

Correct AnswerverifiedShow Answer

The two basic elements of consideration are intention and agreement.

Correct AnswerverifiedShow Answer

Contracts in which one party agrees in good faith to buy all his requirements of certain goods from the other party are generally unenforceable because there is no definite amount.

Correct AnswerverifiedShow Answer

What two exceptions did the UCC create for accord and satisfaction check cases?

Correct AnswerverifiedShow Answer

In January, Alex promised to pay Y-K Inc. $5,000 if it would refrain from filing suit against him on a breach of contract action. Y-K agreed and accepted a $5,000 check from Alex. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

An agreement to settle a debt for less than the sum claimed is referred to as

Correct AnswerverifiedShow Answer

If Crosby and Dash are in disagreement as to the exact amount of money that Crosby owes Dash, then they may choose to form a new agreement at a set amount. If they both perform the new agreement, their conduct would be an example of

Correct AnswerverifiedShow Answer

A promise to do (or not do) something in the future counts as consideration.

Correct AnswerverifiedShow Answer

What is an output contract?

Correct AnswerverifiedShow Answer

Juan agrees to paint Michelle's house for $1,000. Halfway through the job, Juan tells Michelle that he will need an extra $250 to finish the job. Which of the following is a correct evaluation of the situation?

Correct AnswerverifiedShow Answer

The UCC requires consideration for agreements modifying contracts for the sale of goods.

Correct AnswerverifiedShow Answer

Marco agrees to sell Clowns R Us some balloons. The contract states that Clowns may buy as many balloons as it wishes. This agreement is

Correct AnswerverifiedShow Answer

Billy owes a liquidated debt of $3,000 to Rayna, his personal weight trainer. Billy sends Rayna a check for $300 on which he has marked, "Payment in Full." If Rayna cashes the check she will NOT be able to successfully sue Billy for the remainder of the debt.

Correct AnswerverifiedShow Answer

Mary owes $3,800 on her credit card. She sends the credit card company a check for $800 with the notation "payment in full" on the check. If the credit card issuer cashes the check,

Correct AnswerverifiedC

Correct AnswerverifiedShow Answer

Hilda owes Lex $3,000, which is an undisputed amount. If she offers him her car in full settlement of the debt and he accepts, the agreement is binding and he can no longer claim she owes him anything on the original debt.

Correct AnswerverifiedTrue

A forbearance is, in essence, the opposite of an act.

Correct AnswerverifiedShow Answer

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C

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True

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