Business Law Alternate Edition 11th Edition By Jentz – Test Bank

Chapter 12

Consideration

TRUE/FALSE QUESTIONS

A1. In contract law, “consideration” refers to the courtesy that one party shows another in negotiating a deal.

ANSWER: F PAGE: 232 TYPE: N
NAT: AACSB Analytic AICPA Legal

A2. For consideration to have “legally sufficient value,” it must con¬sist of goods or money.

ANSWER: F PAGE: 232 TYPE: +
NAT: AACSB Analytic AICPA Legal

A3. A promise by one party to pay another for refraining from an act is enforceable.

ANSWER: T PAGE: 232 TYPE: =
NAT: AACSB Reflective AICPA Legal

A4. Use of the word consideration in an agreement means that consideration has been given.

ANSWER: F PAGE: 232 TYPE: =
NAT: AACSB Reflective AICPA Legal

A5. A transaction that lacks a bargained-for exchange lacks an element of consideration.

ANSWER: T PAGE: 233 TYPE: N
NAT: AACSB Analytic AICPA Legal

A6. Parties are not generally free to bargain as they wish.

ANSWER: F PAGE: 234 TYPE: =
NAT: AACSB Analytic AICPA Critical Thinking

A7. Normally, a court of law will not question the adequacy of consideration.

ANSWER: T PAGE: 234 TYPE: +
NAT: AACSB Analytic AICPA Legal

A8. Inadequate consideration may indicate undue influence.

ANSWER: T PAGE: 235 TYPE: +
NAT: AACSB Analytic AICPA Legal

A9. The preexisting duty rule permits a party who is bound by contract to per-form a certain duty to use that duty as consideration for a second contract.

ANSWER: F PAGE: 235 TYPE: =
NAT: AACSB Analytic AICPA Legal

A10. A later promise to do what one already has a legal duty to do is legally suf-ficient consideration.

ANSWER: F PAGE: 235 TYPE: =
NAT: AACSB Analytic AICPA Legal

A11. A promise to pay for an act that has already occurred is enforceable.

ANSWER: F PAGE: 235 TYPE: =
NAT: AACSB Analytic AICPA Legal

A12. Rescission is the dissolution of a contract that returns the parties to the positions they held before the contract.

ANSWER: T PAGE: 236 TYPE: N
NAT: AACSB Analytic AICPA Legal