Mann_BLRB 9_TB_Ch12

Business Law and the Regulation of Business

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Chapter 12—Consideration TRUE/FALSE 1. The Uniform Commercial Code follows the common law rule that requires a modification of an exist- ing contract to be supported by consideration in order to be valid. ANS: F MSC: AACSB Analytic 2. A gratuitous promise is a promise made without consideration. ANS: T MSC: AACSB Analytic 3. Past actions unbargained for by the parties in an agreement can become valid consideration for a con- tract. ANS: F MSC: AACSB Analytic 4. Dana gives care to Marnie's dog when Dana finds Marnie's dog ill on the side of the road. After Marnie locates her dog, Marnie promises to reimburse Dana for the cost of treating the dog. Marnie's promise is binding, because there is a bargained-for-exchange. ANS: F MSC: AACSB Analytic 5. In most, if not all, cases where there is a legal detriment to the promisee, there is also a legal benefit to the promisor. ANS: T MSC: AACSB Analytic 6. In a unilateral contract, a promise is exchanged from one party to another for a promise to forbear to act. ANS: F MSC: AACSB Analytic 7. Andrew agreed to exchange something clearly without value to enter a contract with Milt. The contract will not fail for lack of consideration because, if the parties agree to the exchange, the courts will not be concerned about whether the consideration is “adequate.” ANS: F MSC: AACSB Analytic 8. Sandy's private secretary promises not to disclose the contents of a letter she typed if Sandy will give her the next day off with pay. If the secretary takes the day off, Sandy does not have to pay her for the day. ANS: T MSC: AACSB Analytic 9. If Marguarite promises to pay Neal $300 not to defame her, the promise is unenforceable because tort law imposes a preexisting obligation on Neal to refrain from such an act. ANS: T MSC: AACSB Analytic
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10. The parties to a contract may modify the agreement with no additional consideration by simply substi- tuting a new contract. ANS: T MSC: AACSB Analytic 11. The UCC provides that a contract for the sale of goods can be effectively modified without new con- sideration, provided the modification is made in good faith. ANS: T MSC: AACSB Analytic 12. In a unilateral contract a promise is exchanged for an act or forbearance to act. ANS: T MSC: AACSB Analytic 13. "Consideration" requires an actual benefit to both sides of an agreement. ANS: F MSC: AACSB Analytic 14. An output contract is a special form of an illusory contract. ANS: F MSC: AACSB Analytic 15. In the case of Denney v. Reppert the court allowed the employees of a bank to collect a reward, be- cause they supplied information that led to the arrest and conviction of a bank robber. ANS: F MSC: AACSB Analytic 16. Legal detriment means the obtaining by the promisor of that which he had no prior legal right to ob- tain. ANS: F
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Mann_BLRB 9_TB_Ch12 - Chapter 12-Consideration TRUE/FALSE...

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