15e Complete Test Bank Ch.9 Consideration and Cyber-Payments

Business Law with UCC Applications, 15e (Sukys)

Chapter 9 Consideration and Cyber-Payments

1) Uncle Joe promises Mary a new car on her birthday. Uncle Joe's promise constitutes legally sufficient consideration.

Difficulty: 2 Medium

Topic: Requirements of Consideration

Learning Objective: 09-01 Define consideration.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

2) Danny agrees not to go duck hunting if "Save the Ducks" pays him $100. Danny's forbearance does not constitute legally sufficient consideration.

Difficulty: 3 Hard

Topic: Requirements of Consideration

Learning Objective: 09-02 Identify the different types of detriment.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

3) The legal term used to describe the sacrifice that each party must experience is that party's legal detriment.

Difficulty: 2 Medium

Topic: Requirements of Consideration

Learning Objective: 09-02 Identify the different types of detriment.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

4) The law will enforce an agreement that has not been bargained for.

Difficulty: 2 Medium

Topic: Requirements of Consideration

Learning Objective: 09-03 Explain the characteristics necessary for valid consideration.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

5) In a release, only one of the parties must make a legally enforceable promise.

Difficulty: 2 Medium

Topic: Requirements of Consideration

Learning Objective: 09-04 Define unconscionable.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

6) Maria's daughter is seriously ill. Desperate, Maria deeds her $250,000 house to a physician for $2,500 of medical treatment. This contract has a valid bargained-for-exchange and is most likely not legally enforceable.

Difficulty: 2 Medium

Topic: Requirements of Consideration

Learning Objective: 09-04 Define unconscionable.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

7) Assume the CEO of CarolCo Enterprises tenders a $80,000 check to ABC Bank as "Payment in full" of CarolCo's note of $100,000. If ABC cashes the check, this is most likely an accord and satisfaction.

Difficulty: 2 Medium

Topic: Requirements of Consideration

Learning Objective: 09-04 Define unconscionable.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

8) Illusory promises provide mutuality of benefit required in establishing consideration, but only if they involve promissory estoppel.

Difficulty: 2 Medium

Topic: Requirements of Consideration

Learning Objective: 09-04 Define unconscionable.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

9) Consideration requires that the benefits and sacrifices promised between the parties be legal.

Difficulty: 2 Medium

Topic: Requirements of Consideration

Learning Objective: 09-04 Define unconscionable.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

10) Contracts created by promissory estoppel are generally considered agreements without consideration.

Difficulty: 2 Medium

Topic: Types of Consideration

Learning Objective: 09-05 Explain whether a promise not to sue can be consideration.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

11) Modern courts are willing to enforce charitable pledges as enforceable contractual obligations.

Difficulty: 2 Medium

Topic: Types of Consideration

Learning Objective: 09-06 Explain whether a charitable pledge can be consideration.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

12) Laura promises to pay Stuart "a reasonable amount" for repairing her car. Stuart sends Laura a $500 invoice and Laura sends Stuart a $350 check marked "payment in full." There is an agreement created by promissory estoppel.

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-07 Define accord and satisfaction.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

13) The UCC requires the use of the seal in all sale-of-goods contracts.

Difficulty: 2 Medium

Topic: Problems with Consideration

Learning Objective: 09-08 Identify those enforceable contracts that lack consideration.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

14) Alan orally promises to pay a debt that was discharged in bankruptcy. Under federal law Alan's promise is enforceable.

Difficulty: 2 Medium

Topic: Problems with Consideration

Learning Objective: 09-08 Identify those enforceable contracts that lack consideration.

Bloom's: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

15) A bankrupt individual is required by law to repay all of her debts to creditors with an irrevocable offer of reaffirmation.

Difficulty: 2 Medium

Topic: Problems with Consideration

Learning Objective: 09-08 Identify those enforceable contracts that lack consideration.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

16) Under the general law of contracts, a signed, written offer made by a merchant that allows acceptance at any time within a 90-day time period is not binding unless the offeree signs the offer.

Difficulty: 2 Medium

Topic: Problems with Consideration

Learning Objective: 09-09 Explain promissory estoppel.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

17) ABC Co. promises to pay Sarah $1,000 for the "excellent work she has done in the past." When ABC does not pay, Sarah may sue and collect the $1,000.

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-09 Explain promissory estoppel.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

18) James, a police officer, solves a crime assigned to him by his police supervisor. The crime victim has offered a $1,000 reward to 'whomever' solves the crime. James may collect the reward even though the reward is an illusory promise.

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-09 Explain promissory estoppel.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

19) The EU Data Protection Directive created a new crime, called aggravated identity theft.

Difficulty: 2 Medium

Topic: Cyber-Payment Tactics and Concerns

Learning Objective: 09-10 Describe the issues involved in cyber-payments.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

20) The issue in the Classic Case, Hamer v. Sidway, involved the question of legal detriment.

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-04 Define unconscionable.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

21) Linda calls a cab in the morning to get to work. The fare that Linda would pay to the cab is a(n) ________ for the ride to work.

A) exchange

B) donation

C) consideration

D) conversion

Difficulty: 3 Hard

Topic: Requirements of Consideration

Learning Objective: 09-01 Define consideration.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

22) The legal term used to describe the sacrifice that each party must experience in a mutual exchange is that party's legal:

A) detriment.

B) exchange.

C) accord.

D) release.

Difficulty: 2 Medium

Topic: Requirements of Consideration

Learning Objective: 09-02 Identify the different types of detriment.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

23) Which of the following legal detriments is known as forbearance?

A) Doing something that one has a legal right to do

B) Doing something that one does not have legal right to do

C) Giving up something that one has a legal right to keep

D) Refraining from doing something one has a legal right to do

Difficulty: 2 Medium

Topic: Requirements of Consideration

Learning Objective: 09-02 Identify the different types of detriment.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

24) Tasha phones Robert and asks if she can borrow his vacuum cleaner to clean her apartment before her parents visit. Robert agrees to this. But when Tasha goes to pick up the vacuum, Robert refuses to give it to her. Which of the following statements is true?

A) A bargained-for exchange has occurred, so Robert must loan Tasha the vacuum cleaner.

B) A bargained-for exchange has not occurred, so Robert does not have to loan Tasha the vacuum cleaner.

C) Robert has promised Tasha something of value, so he must loan her the vacuum cleaner.

D) Robert has committed a breach of contract.

Difficulty: 3 Hard

Topic: Requirements of Consideration

Learning Objective: 09-03 Explain the characteristics necessary for valid consideration.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

25) Lisa agrees to sell Deb an electronic entertainment center worth $1,000 for $700 cash in order to have a rapid sale. Later, Lisa insists that she may rescind this agreement since the agreed price was 30% below fair market value. Lisa may:

A) rescind, since the consideration is inadequate.

B) rescind, since the agreement is unconscionable.

C) rescind, since the agreement is not bargained for.

D) not rescind the agreement once Deb accepts.

Difficulty: 3 Hard

Topic: Requirements of Consideration

Learning Objective: 09-04 Define unconscionable.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

26) When a consideration is so ridiculously inadequate that it shocks the court's conscience, it is considered:

A) unconscionable.

B) forbearance.

C) illusory.

D) detrimental.

Difficulty: 2 Medium

Topic: Requirements of Consideration

Learning Objective: 09-04 Define unconscionable.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

27) A(n) ________ is an acceptance of an agreement not to sue supported by consideration, which terminates one's right to continue any lawsuit, presently or in the future, on grounds described in the agreement.

A) accord and satisfaction

B) release

C) option

D) promissory estoppel

Difficulty: 2 Medium

Topic: Problems with Consideration

Learning Objective: 09-05 Explain whether a promise not to sue can be consideration.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

28) A written promise not to sue is commonly called a:

A) consideration.

B) forbearance.

C) detriment.

D) release.

Difficulty: 1 Easy

Topic: Types of Consideration

Learning Objective: 09-05 Explain whether a promise not to sue can be consideration.

Bloom's: Remember

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

29) Assuming he has the right, Tom's promise ________, also called ________, is ________ when it is supported by ________.

A) of forbearance; promissory estoppel; enforceable; consideration

B) to donate money; charitable pledge; enforceable; firm offer

C) not to sue; forbearance; enforceable; consideration

D) not to sue; consideration; enforceable; legal detriment

Difficulty: 3 Hard

Topic: Types of Consideration

Learning Objective: 09-05 Explain whether a promise not to sue can be consideration.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

30) ________ is the mutual agreement of less than what has been billed to the debtor.

A) Accord and satisfaction

B) Bankruptcy

C) Accord

D) Consideration

Difficulty: 2 Medium

Topic: Problems with Consideration

Learning Objective: 09-07 Define accord and satisfaction.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

31) In terms of disputed amounts, satisfaction is the:

A) legal term used to describe the sacrifice that each contracting party must experience.

B) implied acceptance of less than what has been billed to the debtor.

C) performance of the accord.

D) express acceptance of less than what has been billed to the defaulter.

Difficulty: 2 Medium

Topic: Problems with Consideration

Learning Objective: 09-07 Define accord and satisfaction.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

32) Today, promises under seal are:

A) enforceable in some states for contracts not involving goods.

B) enforceable under the UCC for contracts involving goods.

C) enforceable under the UCC if made by a merchant, in writing, stating the time period over which the offer will remain open.

D) unenforceable as a consideration in a new contract.

Difficulty: 2 Medium

Topic: Problems with Consideration

Learning Objective: 09-08 Identify those enforceable contracts that lack consideration.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

33) ________ is a legal doctrine that restricts a party from denying that a promise was made under certain conditions, even though consideration has not been exchanged to bind an agreement.

A) Statutes of limitations

B) Promissory estoppel

C) Locus sigilli

D) Accord and satisfaction

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-09 Explain promissory estoppel.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

34) A(n) ________ is a promise to do something that one is already obligated to do by law or some other agreement that cannot be made consideration for a new contract.

A) reaffirmation

B) option

C) promissory estoppel

D) preexisting duty

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-09 Explain promissory estoppel.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

35) Monty quit his $150,000 annual salary job with Computer Associates in Monterey, California, and moved with his family to Fairfield, Connecticut based upon an oral promise by Software Power to provide reimbursement of all moving expenses and at least three years employment at an annual salary of $250,000 per year. One month after moving, and before being reimbursed for moving, Monty's employment with Software Power is terminated due to a reduction in force caused by lower-than-expected product sales. Can Monty successfully sue Software Power?

A) No, since the promise was oral.

B) Yes, under promissory estoppel.

C) No, since a promise of employment is always subject to market conditions.

D) Yes, but only for the moving expenses that Monty can prove he incurred.

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-09 Explain promissory estoppel.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

36) Edwin, Marketing VP of Amalgamated Sales, Inc., writes a letter dated August 1 to Bargain Stores, Inc. offering to sell candy to Bargain Stores at $50 per case for the next thirty days. Bargain Stores then contracts with local retailers based on the offer from Amalgamated. Ten days later, Amalgamated receives an offer from Dandy Stores, Inc. to purchase this same candy at a price of $75 per case. Can Amalgamated withdraw its offer to Bargain Stores?

A) Yes, the offer may be withdrawn since it lacks consideration.

B) No, as this is a firm offer.

C) Yes, the offer was simply an invitation to negotiate.

D) No, as this is only an option.

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-09 Explain promissory estoppel.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

37) Sally's grandmother, Laura, promised in her will to make Sally an heir to her home if she would move into Laura's home and care for her. Sally agreed to this and moved into Laura's home. But when Laura died, her will named Bob, a family friend, as heir to her home. Is Sally legally entitled to the home?

A) Yes, helping her grandmother provided consideration.

B) No, Sally just had a duty to help her grandmother.

C) Yes, Sally was legally closer to her grandmother than Bob.

D) No, Laura may write her will however she wishes.

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-09 Explain promissory estoppel.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

38) While the Washington family was gone for the weekend, their home was broken into and robbed. Manny, a professional boxer who lived next door, saw the thief, apprehended him, and forced him to return the stolen possessions. When the Washingtons returned, Mr. Washington told Manny that he would give him $5,000 for his efforts. The next morning, Mr. Washington gave Manny a check for $2,000. What result?

A) Mr. Washington broke his contract with Manny.

B) Manny would lose if he brought a suit against Mr. Washington because Manny's actions would be a past consideration.

C) The bargained-for-agreement obligated Mr. Washington to pay the boxer $5,000.

D) Mr. Washington would lose if Manny brought a suit against him to recover the amount based on promissory estoppel.

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-09 Explain promissory estoppel.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

39) Oralia agrees to babysit Avery's daughter "when I can" if Avery promises to clean Oralia's house every week. This agreement is ________ because it is based on a(n) ________.

A) enforceable; option contract

B) enforceable; future gift

C) unenforceable; promissory estoppel

D) unenforceable; illusory promise

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-09 Explain promissory estoppel.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

40) The ________ outlaws the unauthorized transfer, possession, or use of a means of identifying another person to violate federal law.

A) Aggravated Identity Theft Act

B) Identity Theft Criminality Act

C) Identity Theft Penalty Enhancement Act

D) Uniform Electronic Transactions Act

Difficulty: 2 Medium

Topic: Cyber-Payment Tactics and Concerns

Learning Objective: 09-10 Describe the issues involved in cyber-payments.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

41) The ________ Directives, also known as the ________ Principles, guarantee the rights of European citizens while, at the same time, ensuring the smooth exchange of data among those nation-states that honor the privacy and data protection standards themselves.

A) Encrypted Cloud Data; Consumer Safe Harbor

B) EU Identify Theft and Deterrence; Debtor Safe Harbor

C) EU Data Protection and Privacy; Safe Harbor

D) EU PRISM; Safe Harbor

Difficulty: 3 Hard

Topic: Cyber-Payment Tactics and Concerns

Learning Objective: 09-10 Describe the issues involved in cyber-payments.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

42) State laws known as ________ limit the time within which a party is allowed to bring suit to collect a debt.

A) promises not to sue

B) charitable pledges

C) option contracts

D) statutes of limitation

Difficulty: 2 Medium

Topic: Types of Consideration

Learning Objective: 09-08 Identify those enforceable contracts that lack consideration.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

43) Tim's mother was concerned that Tim would develop cancer if he used tobacco, so she promised Tim $10,000 if he would refrain from any use of tobacco until age 30. Tim did so, but his mother refused to give him the $10,000. Does Tim have a legal right to the $10,000? Explain.

Difficulty: 3 Hard

Topic: Requirements of Consideration

Learning Objective: 09-02 Identify the different types of detriment.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

44) Teller agreed to buy a stolen piano from Luthor, but failed to live up to his part of the deal. Does Luthor have a legitimate cause of action against Teller? Explain.

Difficulty: 3 Hard

Topic: Requirements of Consideration

Learning Objective: 09-04 Define unconscionable.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

45) Andrew's neighbor, Charles, is selling drugs from his home. Since Andrew is concerned about the well-being of his own family, he offers to pay Charles $60,000 to stop selling drugs. Charles stops, but Andrew refuses to pay. Can Charles successfully sue Andrew to force him to pay the $60,000? Explain.

Difficulty: 3 Hard

Topic: Requirements of Consideration

Learning Objective: 09-04 Define unconscionable.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

46) Sarah promises to give $10,000 for the construction of Save the Butterflies, a local charity, and is publicly honored as a "golden" donor of Save the Butterflies, by putting her name on the "Wall of Honor." Sarah later does not pay the $10,000. Discuss the ways in which Save the Butterflies may legally collect the $10,000 from Sarah.

Difficulty: 3 Hard

Topic: Types of Consideration

Learning Objective: 09-06 Explain whether a charitable pledge can be consideration.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

47) Pantia agreed to write software codes for "a reasonable price" for a video game being produced by Mindbinder, Inc. When Pantia submitted a bill for $5,000, Mindbinder believed that a reasonable amount for the work was $3,000 and sent Pantia a check for that amount with a notation on the check, "Payment in full." Discuss the case.

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-07 Define accord and satisfaction.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

48) Mitchell owed the National Medical Federation $250 for books he had purchased from that organization. He sent the federation a check for $100, writing on the check, "In full payment for the books I purchased." The federation cashed the check, but continued to demand the $150 balance. Discuss if the federation was within its rights to do so and whether the federation's actions reflect an accord and satisfaction agreement with Mitchell.

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-07 Define accord and satisfaction.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

49) Sergie orally agrees to pay Zenith Finance Co. a $300 loan debt that was discharged in bankruptcy after Zenith told Sergie that repaying the debt would help him "rebuild his credit", since Zenith would report his payments to credit reporting agencies. Discuss the case.

Difficulty: 2 Medium

Topic: Problems with Consideration

Learning Objective: 09-08 Identify those enforceable contracts that lack consideration.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

50) Jackie borrowed $1,000 from Uncle John in 1975, with repayment due in 1977. Jackie never repays the loan, and Uncle John never attempts to collect it. In 2004, Jackie writes Uncle John a letter stating that she is sorry that she did not repay the debt and encloses a check for $100 toward repayment. Uncle John cashes the check. He dies of a heart attack one week later. Uncle John's heirs find the letter and sue Jackie to collect the remaining $900 balance. Analyze the case.

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-08 Identify those enforceable contracts that lack consideration.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

51) Matrix, Inc. is considering opening a restaurant in Smallville and has located a prime vacant land location that is for sale. Matrix wants to do some market research and obtain financing for construction before purchasing the land, but is concerned that a competitor, Zion, Inc., will purchase the land if Matrix does not act immediately. What legal steps should Matrix take, short of purchasing the land now, to prevent Zion from acting before them? Explain.

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-09 Explain promissory estoppel.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

52) Mullroy has complained to the local police about the vandalism in his neighborhood. However, the police have taken little interest in curbing the vandalism, much to Mullroy's disappointment. Determined to resolve the problem, Mullroy invites the local sheriff to his daughter's birthday party and offers him free weekend dinners at Mullroy's family restaurant if the sheriff promises to look into the vandalism problem. Discuss the nature of consideration and contract in this case.

Difficulty: 3 Hard

Topic: Problems with Consideration

Learning Objective: 09-09 Explain promissory estoppel.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation