Sully signs a contract to borrow $200,000 from Riverside Bank to buy a house. In the contract, Sully agrees to pay a certain rate of interest on the amount of borrowed funds at monthly intervals for thirty years. This debt is
A) an illusory promise.
B) liquidated.
C) past consideration.
D) unliquidated.

Question

Quizplus · Accepted Answer

The debt in this scenario is liquidated because the amount owed (i.e. $200,000) is a fixed and determinable sum, and the terms of payment (i.e. the interest rate and monthly intervals) are specified in the contract. An illusory promise is a promise that appears to be a commitment, but is so vague or uncertain that it does not actually create an obligation. Past consideration means that something of value was given or done in the past, but is not currently being exchanged for the debt. An unliquidated debt is one where the amount owed is unknown or subject to dispute.

Sully Signs a Contract to Borrow $200,000 from Riverside Bank