Chapter 12 Consideration - 119 CHAPTER 12 CONSIDERATION...

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CHAPTER 12: CONSIDERATION 119 Chapter 12 Consideration TRUE/FALSE QUESTIONS B1. In contract law, “consideration” refers to the time that a party takes to evaluate a deal. ANSWER: F PAGE: 232 TYPE: N NAT: AACSB Analytic AICPA Legal B2. If a promise is made, it will be enforced. ANSWER: F PAGE: 232 TYPE: = NAT: AACSB Analytic AICPA Critical Thinking B3. To be legally sufficient, consideration must include something of economic value. ANSWER: F PAGE: 232 TYPE: N NAT: AACSB Analytic AICPA Legal B4. A promise to do something that one has a prior legal duty to do is not consideration. ANSWER: T PAGE: 232 TYPE: + NAT: AACSB ReflectiveAICPA Legal B5. Failing to use the word consideration in an agreement means that no consideration has been given. ANSWER: F PAGE: 232 TYPE: = NAT: AACSB ReflectiveAICPA Legal B6. A bargained-for exchange is one of the elements of consideration.
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120 TEST BANK B—UNIT THREE: CONTRACTS AND E-CONTRACTS ANSWER: T PAGE: 233 TYPE: N NAT: AACSB Analytic AICPA Legal
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CHAPTER 12: CONSIDERATION 121 B7. Inadequate consideration may reflect a lack of bargained-for exchange. ANSWER: T PAGE: 235 TYPE: = NAT: AACSB Analytic AICPA Legal B8. Unforeseen difficulties that justify a demand for additional compensation include risks ordinarily assumed in business. ANSWER: F PAGE: 235 TYPE: = NAT: AACSB Analytic AICPA Legal B9. Extraordinary difficulties that were unforeseen at the time a contract was formed do not justify a demand for additional compensation. ANSWER: F PAGE: 235 TYPE: = NAT: AACSB Analytic AICPA Legal B10. An obligation is enforceable only if it is supported by past consideration. ANSWER: F PAGE: 235 TYPE: = NAT: AACSB Analytic AICPA Legal B11. Any promise made with respect to a past event is enforceable because the event is certain—it has already occurred. ANSWER: F PAGE: 235 TYPE: = NAT: AACSB Analytic AICPA Legal B12. Rescission is the substitution of one party to a contract for a third party, who agrees to assume the contractual duties. ANSWER: F PAGE: 236 TYPE: N NAT: AACSB Analytic AICPA Legal B13. Cashing a check in an amount for less than a balance owed and on which the debtor has written “payment in full” will discharge a liquidated debt. ANSWER: F PAGE: 237 TYPE: = NAT: AACSB ReflectiveAICPA Legal
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122 TEST BANK B—UNIT THREE: CONTRACTS AND E-CONTRACTS B14. A release is a contract in which one party forfeits the right to pursue a legal claim against another. ANSWER: T PAGE: 238 TYPE: = NAT: AACSB Analytic AICPA Legal
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CHAPTER 12: CONSIDERATION 123 B15. An accord and satisfaction is used to discharge a liquidated debt. ANSWER: F PAGE: 238 TYPE: = NAT: AACSB Analytic AICPA Legal B16. In many states, a release requires a signed writing. ANSWER: T PAGE: 238 TYPE: N NAT: AACSB Analytic AICPA Legal B17. A covenant not to sue is an agreement to substitute a contractual obligation for a legal action. ANSWER: T PAGE: 239 TYPE: N NAT: AACSB ReflectiveAICPA Legal B18. Promissory estoppel requires reliance of a substantial and definite character.
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