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Exam 12: Consideration

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Question 31

Multiple Choice

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Maria is the sheriff of Narez, Texas. Oscar robs a Narez gas station and a $500 reward is offered for his capture. When, later, Maria finds and arrests him, with respect to the reward, she can

A) collect it.
B) not collect it because she had a preexisting duty to capture Oscar.
C) not collect it because it is not legally sufficient consideration.
D) not collect it because it is an illusory promise.

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

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Question 32

Multiple Choice

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Expo Center Inc. and Festival Music LLC have an executory contract. They agree to rescind it and simultaneously enter into a new contract. If the previous contract was subject to a preexisting duty, the new contract will most likely be

A) invalid.
B) enforceable.
C) valid.
D) voidable.

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

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Question 33

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When the doctrine of promissory estoppel is applied, the promisor is estopped, or barred, from performing the promise.

Ethan is indebted to Finance Credit Corporation for $100,000. Ethan agrees to pay, and Finance Credit agrees to accept, a lesser amount than the creditor originally claimed was owed. This agreement is

A promise made in return for an act or event that has already taken place is fully enforceable.

Providing accounting services is "something of legally sufficient value."

Molly's motorcycle is damaged in an accident caused by Luc's negligence. Luc agrees to pay Molly $25,000 if she agrees to release him from further liability. Molly agrees. If Molly's damages ultimately exceed $25,000, she can

Forfeiting a right to sue to recover further damages can constitute consideration.

For an accord and satisfaction to occur, the amount of a debt must be in dispute.

To be legally sufficient, consideration must be something of value in the eyes of the law.

Sam offers Tiffany $1,000 for her collection of rare coins. She accepts. If a dispute arises, a court would likely

A fire threatens to engulf a commercial building in Metro City. The building's owner promises a cash reward to the Metro Fire Department to extinguish the fire. The firefighters cannot claim the reward because

Don slips and falls on a patch of ice on Ella's property. Ella offers Don $10,000 if he promises not to pursue any slip-and-fall legal claim against her. Don agrees, but later discovers that it will cost $40,000 in medical expenses for a latent injury. In Don's suit against Ella, Don will most likely recover

An illusory promise is a promise that is enforceable without consideration.

National Trucking Company begins transporting crude for Oil Inc. under a contract for a stated amount per load. After six months, National demands an increase in the stated amount because ordinary business expenses have increased. Oil's agreement to pay the increased amount is

Ann's Sandwich Shop and Bob's Coffee Bar are adjacent businesses. Ann, whose small shop has little room for her customers to sit, offers Bob a discount on purchases if he will allow her customers to sit at the tables on the sidewalk in front of his store. Bob's forbearance from asking Ann's customers not to use his tables is legally sufficient consideration

Raj defends against a breach-of-contract suit by Student Loan Corporation by claiming that their deal-a student loan-was unfair because the consideration for the contract was inadequate. With respect to Raj's defense, the court will most likely rule in favor of the lender on the ground that Raj

Risks ordinarily assumed in business constitute consideration for the modification of a contract.

Two parties can mutually agree to rescind a contract only to the extent that it has been executed-otherwise, there is nothing to rescind.

Promissory estoppel requires that justice will be better served by the enforcement of the promise.