Question 1

Which of the following is NOT true about consideration?
A)Consideration must be of some value in the eyes of the law.
B)A gratuitous promise is not supported by consideration.
C)Consideration has to be adequate.
D)Consideration must be sufficient.
E)Consideration can be in the form of a detriment to a party.

Accepted Answer

Consideration does not need to be adequate, meaning the law does not require the value of the consideration to be fair or equal to the value of the promise or goods/services received in return. The key requirement is that consideration must be legally sufficient (having some value in the eyes of the law) and not necessarily equal in value to what is received in return.

Question 2

A gratuitous promise differs from a contract in that
A)a gratuitous promise cannot lapse.
B)it does not require the payment of money to the offeror by the offeree.
C)consideration flows only in one direction.
D)a gratuitous promise cannot be revoked.
E)the terms of a gratuitous promise are not precise enough to be binding.

Accepted Answer

A contract requires mutual consideration, where both parties exchange something of value. In a gratuitous promise, only one party is providing consideration, such as a gift or a donation. Therefore, consideration only flows in one direction.

Question 3

When a contract is authenticated by the affixing of a seal,the contract will be enforceable even when it lacks
A)a promissory basis.
B)an acceptance.
C)consideration.
D)contractual intention.
E)an offer.

Accepted Answer

Historically, a seal on a document signified a formal commitment, making the contract enforceable even without consideration, which is usually a requirement for contract validity.

Question 4

The concept of estoppel is where
A)the court stops a party from performing a contract.
B)the terms of the contract require that one of the parties be stopped from performing a particular act.
C)the promisee is stopped from denying the truth of a fact or statement.
D)the court suspends the operation of the contract.
E)the maker of a statement or promise is prevented by the courts from either denying the truth of the statement or going back on a promise.

Accepted Answer

Estoppel is a legal principle that prevents someone from going back on their word, as long as another party has relied on that word to their detriment. This can involve preventing someone from denying the truth of a statement or promise, as stated in choice E. Choices A, B, C, and D do not accurately describe the concept of estoppel.

Question 5

Use the fact situation in Q10 to answer the related question that follows. The principle of law that arises out of the fact situation above was meant to overcome an earlier principle of law that stated that
A)payment of a lesser sum terminates the contract.
B)a contract does not need consideration at all.
C)a contract is terminated by performance.
D)payment of a lesser sum in satisfaction of a greater sum is no payment at all.
E)none of the above

Accepted Answer

The fact situation relates to the doctrine of accord and satisfaction, where a party agrees to accept a lesser sum in satisfaction of a greater sum owed under a contract. The principle of law that arises out of this is that payment of a lesser sum in satisfaction of a greater sum is no payment at all. This principle overcomes the earlier principle that payment of a lesser sum terminates the contract. Options A, B and C are not relevant to this fact situation.

Question 6

On March 1,Al agrees to sell Barb his house for $250 000.Barb pays a deposit of $15 000,and they agree that title will transfer and the price will be paid on April 30.The agreement is signed by both parties under seal.What is the consideration on Barb's part?
A)the deposit of $15 000
B)there is no consideration
C)quantum meruit
D)the seal
E)the promise to pay the $250 000

Accepted Answer

The answer of On March 1,Al agrees to sell Barb...

Question 7

The contractual requirement of consideration provides that
A)the contract must be given careful consideration before it is entered into.
B)the offeror must pay cash for the offeree's promise to perform an act.
C)an offeree must pay cash for the offeror's promise to perform an act.
D)each party must give something of value in exchange.
E)what is exchanged by the parties must be of equal value.

Accepted Answer

The contractual requirement of consideration means that each party must give something of value in exchange. This is typically in the form of a promise to perform an act, but it could also be the transfer of goods or services. The key is that both parties must give something of value for the contract to be valid. It is not necessary for what is exchanged to be of equal value, as long as there is some value on both sides.

Question 8

Even when offer and acceptance and consideration are present,there may be no enforceable contract if
A)the subject of the contract is too trivial.
B)there were no witnesses present at the signing of the contract.
C)the contract is not in writing.
D)there is no intent to create legal relations.
E)the consideration is not adequate.

Accepted Answer

Intent to create legal relations is an essential element of a valid contract. Without this, even if there is offer, acceptance and consideration, the contract may not be enforceable.

Question 9

A,at the request of B,enters into a contract to buy a horse from B for a certain price.Just after entering into the contract,B tells A that the horse is sound and healthy.Later A discovers that,in fact,the horse is in ill health.In this situation,B's statement to A that the horse was sound and healthy
A)is partly fresh and past consideration so as to not make B's promise binding.
B)is partly fresh and partly past consideration so as to make B's promise binding.
C)is past consideration so as to not make B's promise binding
D)is fresh consideration so as to make B's promise binding
E)all of the above

Accepted Answer

B's statement to A about the horse's health was made after the contract was already formed, so it cannot be considered fresh consideration. Additionally, there was no additional benefit given by A to B in exchange for the statement, so it cannot be considered partly fresh and partly past consideration. Therefore, the statement is only based on past consideration (i.e. the original agreement to sell the horse), which is not enough to make it binding.

Question 10

Shahid orders a pizza by telephone and says he will pay on delivery.Which of the following would constitute consideration received by Shahid?
A)placing the call.
B)promising to pay for the pizza.
C)handing over the money.
D)accepting delivery of the pizza.
E)none of the above.

Accepted Answer

Accepting delivery of the pizza would be the consideration received by Shahid as it is the act of receiving the pizza he ordered, in exchange for the promise to pay upon delivery.

Question 11

Use this fact situation to answer the questions that follow it. In January 1941 in Canada,John Landlord and Harry Tenant enter into a lease under which Harry agrees to rent a house from John for five years at a rent of $1000.00 per month.In March 1941,Canada declares war on Germany and John tells Harry that until the war is over,Harry will not have to pay rent.Of course,Harry stops paying rent while the war goes on.The war ends in January 1945,and now John Landlord sues Harry for all of the rent from March 1941 to present.In turn,Harry is thinking of suing John Landlord on the basis that his statement to Harry about not paying the rent during the war was a contract.
In the fact situation above,
A)John Landlord can argue that he is entitled to the rent,because there was no consideration for his promise to Harry,and the court will accept this.
B)Harry will be able to successfully sue John Landlord for breach of his agreement not to make Harry pay rent during the war.
C)John Landlord can argue that it would be unjust for Harry not to have to pay the rent,and this argument will succeed.
D)at the very least the court will value John Landlord's claim on a quantum meruit basis.
E)Harry Tenant will argue that John Landlord's promise in March 1941 stops John Landlord from suing him for rent from March 1941 to the end of the war,and this argument will be a good defence to John Landlord's action.

Accepted Answer

This is the best answer because John Landlord's promise not to make Harry pay rent during the war can be seen as a contractual agreement between the two parties. Therefore, Harry can use this promise as a defense to John Landlord's action to recover the rent for the period from March 1941 to the end of the war. However, this does not mean that Harry is entitled to a refund of any rent he paid during this period.

Question 12

An intention to create legal relations exists if
A)the promisor and the promisee have identified all the consideration involved in the contract.
B)there is an offer,acceptance,and consideration.
C)a reasonable person would believe that the parties intended to be bound by the contract.
D)the court examines the facts and determines that the parties intended to enter into legal relations.
E)the parties have capacity to enter into a contract.

Accepted Answer

An intention to create legal relations exists if a reasonable person would believe that the parties intended to be bound by the contract. This means that the parties must have intended for the agreement to be legally enforceable. Identifying consideration, having an offer, acceptance, and capacity to enter into a contract are all important elements, but they do not necessarily indicate an intention to create legal relations. The court may examine the facts to determine intent, but the key factor is whether a reasonable person would believe that the parties intended to be legally bound.

Question 13

Consideration is
A)the price that is paid for the promise of another.
B)a special kind of gratuitous promise.
C)the acceptance of an offer.
D)the offer that is made to another.
E)a special kind of acceptance.

Accepted Answer

Consideration is the price that is paid for the promise of another. It is the exchange of something of value between parties to a contract, which creates a binding agreement between them. Consideration can be in the form of money, goods, services, or even a promise to do or not do something. Without consideration, a contract is not legally enforceable.

Question 14

The reasonable bystander test is
A)a test that employs witnesses to make candid observations about contract cases.
B)the test that is used by the courts to determine whether parties intended to enter into legal relations with each other.
C)the test that employs non-specialists as members of a jury in contract cases.
D)the test that the parties can use to determine who is in breach of contract.
E)the test that the parties can use to determine compensation in contract cases.

Accepted Answer

The reasonable bystander test is used by the courts to determine whether parties intended to enter into legal relations with each other. It asks whether a reasonable bystander would have believed that the parties intended to be legally bound by their agreement.

Question 15

Use the fact situation in Q10 to answer the related question that follows. The principle of contract law that arises in the fact situation above is
A)revocation.
B)fraudulent misrepresentation.
C)deceit.
D)fresh consideration.
E)promissory estoppel.

Accepted Answer

The principle of promissory estoppel arises in the fact situation, where Carol relied on Harry's promise to pay her $200 per week to quit her job and move to California. Even though the promise was not supported by consideration, Carol suffered a detriment by quitting her job and moving. Therefore, Harry is estopped from denying his promise in court.

Question 16

Jack walks into a bar.He is a little tipsy.The waitress pours him a pint of beer and he pays with all the money he has on him.He makes this statement to the waitress: "Sorry I can't tip you today,but you know what,I have this lottery ticket,and if I win,I'll split it with you." The waitress says,"No problem,Jack." Jack later makes a copy of the ticket for the waitress.The next day Jack receives a call from Stephanie,the waitress,who tells him that she checked the numbers and that he has won $1 million.Stephanie asks,"Our deal is on right?" Jack says,"What deal?" She says,"You promised to split the winning ticket with me." He says,"Really?" Which of the following is true?
A)Jack will have to split the proceeds with Stephanie on a quantum meruit basis.
B)Stephanie can sue Jack for breach of contract if she does not get her share of the ticket.
C)Jack promised to split the winning ticket with Stephanie and she accepted,so a valid contract was created.
D)No contract arose because there was no intention on the part of Jack to enter into legal relations with Stephanie.
E)A contract did not arise because Jack's statement was not an offer.

Accepted Answer

Jack's statement was likely made in a casual, social context without the intention to create legal obligations, so no contract arose.

Question 17

Jack and Jill are friends.Jack agrees to mow Jill's lawn and Jill agrees to pay Jack $50.00.Jill wants the lawn mowed by April 1.Jill returns on April 3 and finds that the lawn has not been mowed.Jill,who is entertaining the next day,goes to Jack and promises that if he mows the lawn that day,she will give him an additional $20.00.Jack mows the lawn but Jill refuses to pay him the additional $20.00.Which of the following is true?
A)Jack can sue Jill for breach of contract.
B)Jill has no obligation to pay because the promise to pay the additional $20.00 was not supported by fresh consideration.Jack had a pre-existing legal duty to mow the lawn.
C)There was no offer and acceptance.
D)Jill has an obligation to pay the additional $20.00 because a legally enforceable promise to pay was made.
E)Jill made an offer and Jack accepted it,so a contract was created.

Accepted Answer

Jack had a pre-existing legal duty to mow the lawn, so the promise of additional payment was not supported by fresh consideration. Therefore, Jill has no obligation to pay the additional $20.00 and Jack cannot sue for breach of contract.

Question 18

The principle of injurious reliance is
A)the loss or harm that is suffered by a promisee who,to his or her detriment,relies on a gratuitous promise.
B)the contractual relationship that arises between an injured party and the person or persons on whom this injured party relies.
C)the injury that a person in a contractual relationship suffers when there is a breach of contract.
D)the amount of compensation that is awarded to a party where there is a breach of contract.
E)the personal injury that is suffered by persons who are involved in contractual situations.

Accepted Answer

The principle of injurious reliance refers to the loss or harm suffered by a party who relies on a gratuitous promise to their detriment. This means that they have suffered some sort of harm or loss due to their reliance on the promise, even though it was not given in exchange for anything. It is also known as promissory estoppel.

Question 19

James does some work for Jim.Jim refuses to pay on the grounds that not all the work was done.Jack takes Jim to court and the judge says Jack is entitled to a quantum meruit.This means that
A)the parties will agree on the appropriate price.
B)a dispute regarding the price should be resolved by arbitration.
C)Jim must pay a reasonable amount for the services rendered.
D)a price will be fixed for the work done.
E)Jack is entitled to his expenses.

Accepted Answer

Quantum meruit means "as much as he has deserved" or "as much as is deserved." In legal terms, it refers to the amount of compensation that is reasonable for services rendered when there is no contract specifying payment. In this case, the judge has determined that Jack is entitled to a reasonable amount for the work he did for Jim, even if it was not all of the work that was agreed upon. Therefore, choice C is the best answer.

Question 20

Which of the following would a court NOT regard as consideration on the part of a party to a contract?
A)a promise to pay for what the other party has already done
B)giving up what the party honestly believes is a right to sue
C)a promise to pay money to the other party in the future
D)a promise to pay money to a third party who is not a party to the contract
E)money paid to the other party

Accepted Answer

Consideration must be something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances. A promise to pay for what the other party has already done is not considered valid consideration because it does not involve a new or additional benefit or detriment to either party; it is essentially a promise to pay for a past action, which does not meet the requirement for consideration in forming a contract.

Quiz 7: Formation of a Contract: Consideration and Intention

Which of the following is NOT true about consideration?

A gratuitous promise differs from a contract in that

When a contract is authenticated by the affixing of a seal,the contract will be enforceable even when it lacks

The concept of estoppel is where

Use the fact situation in Q10 to answer the related question that follows. The principle of law that arises out of the fact situation above was meant to overcome an earlier principle of law that stated that

On March 1,Al agrees to sell Barb his house for $250 000.Barb pays a deposit of $15 000,and they agree that title will transfer and the price will be paid on April 30.The agreement is signed by both parties under seal.What is the consideration on Barb's part?

The contractual requirement of consideration provides that

Even when offer and acceptance and consideration are present,there may be no enforceable contract if

Shahid orders a pizza by telephone and says he will pay on delivery.Which of the following would constitute consideration received by Shahid?

An intention to create legal relations exists if

Consideration is

The reasonable bystander test is

Use the fact situation in Q10 to answer the related question that follows. The principle of contract law that arises in the fact situation above is

The principle of injurious reliance is

James does some work for Jim.Jim refuses to pay on the grounds that not all the work was done.Jack takes Jim to court and the judge says Jack is entitled to a quantum meruit.This means that

Which of the following would a court NOT regard as consideration on the part of a party to a contract?