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Question 1
Tony is an old man who has lived in the same house for forty years. Cornelius, an eighteen-year-old high school senior, and his family have lived next door to Tony since Cornelius was two years old. Tony has watched Cornelius grow up and, over the years, he has developed a special affection for Cornelius. Tony had been an avid car collector as a younger man and has a fleet of vintage cars from the 1950s and 1960s. The day before Cornelius's first day of his senior year in high school, Tony promises that if Cornelius shovels the snow off of Tony's sidewalk for the coming winter and mows Tony's lawn for the coming summer, Tony will let Cornelius pick one of Tony's cars as a graduation present. Cornelius shovels Tony's walk during the winter and mows Tony's lawn every week during that summer. However, at the end of the summer, before Cornelius has chosen a car, Tony dies. Tony's estate refuses to allow Cornelius to choose a car. Cornelius sues Tony's estate. The estate argues that shoveling snow and mowing the lawn was not enough of a price to pay for the car. The estate will:
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct The general rule is that, if there is consideration, then the courts will not review the adequacy of the consideration to see whether or not a bargained for promise or performance is equal in value to the counter promise or performance. Therefore, the contract that Tony and Cornelius had will not be reviewed and the estate will have to allow Cornelius to choose one of Tony's cars.
Incorrect! The general rule is that, if there is consideration, then the courts will not review the adequacy of the consideration to see whether or not a bargained for promise or performance is equal in value to the counter promise or performance. Therefore, the contract that Tony and Cornelius had will not be reviewed and the estate will have to allow Cornelius to choose one of Tony's cars.
Question 2
Tony is an old man who has lived in the same house for forty years. Cornelius, an eighteen-year-old high school senior, and his family have lived next door to Tony since Cornelius was two years old. Tony has watched Cornelius grow up and, over the years, he has developed a special affection for Cornelius. Tony had been an avid car collector as a younger man and has a fleet of vintage cars from the 1950s and 1960s. In anticipation of Cornelius's high school graduation, Tony promises to "sell" Cornelius a vintage 1957 Cadillac for $1. Cornelius agrees to "buy" the car for $1 but, before they make the exchange, Tony dies. Tony's estate refuses to sell the car to Cornelius and Cornelius sues the estate. Cornelius will probably:
Correct
Incorrect!
Correct A transaction is said to involve nominal consideration when the parties each make promises in the form of a bargain but neither party views their promise as the price they pay for the promise they receive. Here, it is safe to say that Tony did not consider the $1 as actual payment for the car. Therefore, the $1 that Cornelius gave Tony is only nominal consideration. Since the general rule is that nominal consideration will not make a promise enforceable, Cornelius will not be able to hold Tony's estate to the deal he made with Tony and B is the correct answer.
Incorrect! A transaction is said to involve nominal consideration when the parties each make promises in the form of a bargain but neither party views their promise as the price they pay for the promise they receive. Here, it is safe to say that Tony did not consider the $1 as actual payment for the car. Therefore, the $1 that Cornelius gave Tony is only nominal consideration. Since the general rule is that nominal consideration will not make a promise enforceable, Cornelius will not be able to hold Tony's estate to the deal he made with Tony and B is the correct answer.
Correct
Incorrect!
Correct
Incorrect!
Question 3
Tony is an old man who has lived in the same house for forty years. Cornelius, an eighteen-year-old high school senior, and his family have lived next door to Tony since Cornelius was two years old. Tony had been an avid car collector as a younger man and has a fleet of vintage cars from the 1950s and 1960s. Tony is having some tax problems and is trying to sell some of his assets in order to reduce his tax burden. Tony calculates that if he sells a few of his vintage cars for $1 each, he will receive a tax break that is worth more that the car itself is worth. Tony explains his situation to Cornelius and offers to sell Cornelius his vintage 1957 Cadillac for $1. Cornelius agrees to buy the car for $1 but, before they make the exchange, Tony dies. Tony's estate refuses to sell the car to Cornelius and Cornelius sues the estate. Cornelius will probably:
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct A transaction is said to involve nominal consideration when the parties each make promises in the form of a bargain but neither party views their promise as the price they pay for the promise they receive. Normally, nominal consideration is not binding. In this case, however, both Tony and Cornelius consider the $1 to be the actual price of the car. Therefore, the $1 is valid consideration and the courts will not interfere simply because the car is worth more that the consideration that was given for it. Tony's estate will have to sell Cornelius the car for $1 and D is the correct answer.
Incorrect! A transaction is said to involve nominal consideration when the parties each make promises in the form of a bargain but neither party views their promise as the price they pay for the promise they receive. Normally, nominal consideration is not binding. In this case, however, both Tony and Cornelius consider the $1 to be the actual price of the car. Therefore, the $1 is valid consideration and the courts will not interfere simply because the car is worth more that the consideration that was given for it. Tony's estate will have to sell Cornelius the car for $1 and D is the correct answer.
Question 4
Tony is an old man who has lived in the same house for forty years. Cornelius, an eighteen-year-old high school senior, and his family have lived next door to Tony since Cornelius was two years old. Tony had been an avid car collector as a younger man and has a fleet of vintage cars from the 1950s and 1960s. Tony is having some tax problems and is trying to sell some of his assets in order to reduce his tax burden. One of Tony's cars is a vintage 1957 Cadillac worth $35,000. On April 1st, Tony offers to sell the car to Cornelius for $32,000. Tony promises to keep the offer open until April 15th and Cornelius gives Tony $1 in exchange for that promise. On April 5th, Tony tells Cornelius that he has decided not to sell the car. On April 12th, Cornelius accepts Tony's original offer of the car for $32,000. When Tony refuses to sell the car, Cornelius sues him. Cornelius will probably:
Correct
Incorrect!
Correct A transaction is said to involve nominal consideration when the parties each make promises in the form of a bargain but neither party views their promise as the price they pay for the promise they receive. Normally, nominal consideration is not binding. However, most courts hold that nominal consideration will make an option (a promise to hold an offer open for a fixed amount of time) binding. Here, Tony gave Cornelius an option so the $1, even though it is only nominal consideration, is enough to make the promise to hold the offer open binding. Therefore, Tony had to keep the offer open and B is the correct answer.
Incorrect! A transaction is said to involve nominal consideration when the parties each make promises in the form of a bargain but neither party views their promise as the price they pay for the promise they receive. Normally, nominal consideration is not binding. However, most courts hold that nominal consideration will make an option (a promise to hold an offer open for a fixed amount of time) binding. Here, Tony gave Cornelius an option so the $1, even though it is only nominal consideration, is enough to make the promise to hold the offer open binding. Therefore, Tony had to keep the offer open and B is the correct answer.
Correct
Incorrect!
Correct
Incorrect!
Question 5
Cornelius is driving his new vintage 1957 Cadillac around his neighborhood in Battle Creek, Michigan, when he loses control of his car. The car rides up onto the sidewalk in front of Trixi's lawn where her prize flowers are growing. Cornelius narrowly misses the flower garden and does no other damage to Trixi's property. When Trixi sees how close her flowers came to being ruined, she threatens to sue Cornelius for assault, battery, negligent infliction of emotional distress, trespass to land and nuisance. Cornelius has only just graduated from high school and has no idea what half the words Trixi is saying mean. Cornelius is afraid that he could be in trouble so he promises to pay Trixi $5,000 if Trixi promises not to sue him. Trixi, who knows that Cornelius hasn't done anything to her and that she has no claim against him, agrees. If Cornelius fails to pay Trixi the $5,000 and Trixi sues him for it, she will probably:
Correct
Incorrect!
Correct
Incorrect!
Correct A bargained for promise to surrender or forbear from asserting a claim that is reasonable and held in good faith constitutes consideration. However, if a claim is not reasonable or not held in good faith, the promise to surrender or forbear from asserting the claim is not valid consideration. Here, Trixi's claim was not reasonable or held in good faith so promising to forbear from suing Cornelius is not valid consideration for the promise to pay $5,000. Therefore, she cannot enforce the promise and C is the correct answer.
Incorrect! A bargained for promise to surrender or forbear from asserting a claim that is reasonable and held in good faith constitutes consideration. However, if a claim is not reasonable or not held in good faith, the promise to surrender or forbear from asserting the claim is not valid consideration. Here, Trixi's claim was not reasonable or held in good faith so promising to forbear from suing Cornelius is not valid consideration for the promise to pay $5,000. Therefore, she cannot enforce the promise and C is the correct answer.
Correct
Incorrect!
Question 6
Ben and Jerry have opened a successful chain of ice cream stores throughout the United States. Hearing that Ben and Jerry are looking for a new milk supplier and knowing that being a supplier for Ben and Jerry would give them valuable exposure, Moo Juice approaches Ben and Jerry with an offer to become their new milk supplier. Moo Juice and Ben and Jerry enter into a contract under which Moo Juice promises to supply Ben and Jerry with all of the milk they need for $1 per gallon and Ben and Jerry promise to buy as much milk as they want to buy from Moo Juice at $1 per gallon. One week after the parties enter the contract, an epidemic of Mad Cow Disease breaks out, wiping out a large portion of the dairy industry. The price of milk spikes to $4 per gallon. Because of the increase in price, Moo Juice refuses to sell milk to Ben and Jerry at their agreed price. If Ben and Jerry sue Moo Juice, they will win:
Correct
Incorrect!
Correct What Moo Juice and Ben and Jerry have is nothing more than an illusory promise because, while Moo Juice is bound to sell Ben and Jerry all of the milk they need, Ben and Jerry are not bound to buy anything from Moo Juice. The general rule is that if one party makes an illusory promise in exchange for someone else's real promise neither party is bound. Therefore, Ben and Jerry and Moo Juice do not have a binding contract and Ben and Jerry will not be able to sue to enforce the contract. That being the case, FALSE is the correct answer.
Incorrect! What Moo Juice and Ben and Jerry have is nothing more than an illusory promise because, while Moo Juice is bound to sell Ben and Jerry all of the milk they need, Ben and Jerry are not bound to buy anything from Moo Juice. The general rule is that if one party makes an illusory promise in exchange for someone else's real promise neither party is bound. Therefore, Ben and Jerry and Moo Juice do not have a binding contract and Ben and Jerry will not be able to sue to enforce the contract. That being the case, FALSE is the correct answer.
Question 7
Ben and Jerry have opened a successful chain of ice cream stores throughout the United States. Hearing that Ben and Jerry are looking for a new milk supplier and knowing that being a supplier for Ben and Jerry would give them valuable exposure, Moo Juice approaches Ben and Jerry with an offer to become their new milk supplier. Moo Juice and Ben and Jerry enter into a contract under which Moo Juice promises to supply Ben and Jerry with all of the milk they need for $1 per gallon and Ben and Jerry promise to buy all of the milk they need from Moo Juice at $1 per gallon. However, the contract also states that Ben and Jerry can terminate the contract at any time and for any reason. One week after the parties enter the contract, an epidemic of Mad Cow Disease breaks out, wiping out a large portion of the dairy industry. The price of milk spikes to $4 per gallon. Because of the increase in price, Moo Juice refuses to sell milk to Ben and Jerry at their agreed price. If Ben and Jerry sue Moo Juice, they will win:
Correct
Incorrect!
Correct What Moo Juice and Ben and Jerry have is nothing more than an illusory promise because, while Moo Juice is bound to sell Ben and Jerry all of the milk they need, Ben and Jerry are not bound to buy anything from Moo Juice. It looks like Ben and Jerry are bound because they agree to buy all the milk that they need from Moo Juice. However, by being allowed to terminate the contract at any time and for any reason, they are really not bound by the contract at all. The general rule is that if one party makes an illusory promise in exchange for someone else's real promise neither party is bound. Therefore, Ben and Jerry and Moo Juice do not have a binding contract and Ben and Jerry will not be able to sue to enforce the contract. That being the case, FALSE is the correct answer.
Incorrect! What Moo Juice and Ben and Jerry have is nothing more than an illusory promise because, while Moo Juice is bound to sell Ben and Jerry all of the milk they need, Ben and Jerry are not bound to buy anything from Moo Juice. It looks like Ben and Jerry are bound because they agree to buy all the milk that they need from Moo Juice. However, by being allowed to terminate the contract at any time and for any reason, they are really not bound by the contract at all. The general rule is that if one party makes an illusory promise in exchange for someone else's real promise neither party is bound. Therefore, Ben and Jerry and Moo Juice do not have a binding contract and Ben and Jerry will not be able to sue to enforce the contract. That being the case, FALSE is the correct answer.
Question 8
Ben and Jerry have opened a successful chain of ice cream stores throughout the United States. Hearing that Ben and Jerry are looking for a new milk supplier and knowing that being a supplier for Ben and Jerry would give them valuable exposure, Moo Juice approaches Ben and Jerry with an offer to become their new milk supplier. Moo Juice and Ben and Jerry enter into a contract under which Moo Juice promises to supply Ben and Jerry with all of the milk they need for $1 per gallon and Ben and Jerry promise to buy all of the milk they need from Moo Juice at $1 per gallon. However, the contract also states that Ben and Jerry can terminate the contract at any time and for any reason, so long as they give Moo Juice two weeks notice. One week after the parties enter the contract, an epidemic of Mad Cow Disease breaks out, wiping out a large portion of the dairy industry. The price of milk spikes to $4 per gallon. Because of the increase in price, Moo Juice refuses to sell milk to Ben and Jerry at their agreed price. If Ben and Jerry sue Moo Juice, they will win:
Correct Here, Ben and Jerry and Moo Juice have an enforceable contract. Although Ben and Jerry can terminate the contract at any time and for any reason, they must give two weeks notice. That means that they are bound to Moo Juice for a minimum of two weeks. Because they are bound to Moo Juice, this contract is not illusory. It is an enforceable contract and Ben and Jerry will be able to sue for its enforcement. That being the case, TRUE is the correct answer.
Incorrect! Here, Ben and Jerry and Moo Juice have an enforceable contract. Although Ben and Jerry can terminate the contract at any time and for any reason, they must give two weeks notice. That means that they are bound to Moo Juice for a minimum of two weeks. Because they are bound to Moo Juice, this contract is not illusory. It is an enforceable contract and Ben and Jerry will be able to sue for its enforcement. That being the case, TRUE is the correct answer.