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Bl Practice Quiz Ch. 7

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BLT&E-7e: Practice Quiz

Chapter 10:

Consideration

1. Consideration may be defined as: a. a socially approved way to provide for the poor. b. something of value given in exchange for a promise. c. an arrangement for transferring and allocating risk. d. a way to promote healthy living.

Answers:

a. Incorrect. This is not a definition of consideration. b. Correct. Consideration is something valuable that a person gives in exchange for a promise of some sort. c. Incorrect. This is a definition of insurance. d. Incorrect. This is not a definition of consideration.

2. Often, consideration is broken down into two parts, something of legal value and: a. some kind of income redistribution. b. some kind of coercive behavior. c. a clear moral hazard. d. a bargained-for exchange.

Answers:

a. Incorrect. This is not the second part of consideration (although a promise might involve a voluntary redistribution of income). b. Incorrect. Consideration is a necessary component of a contract, and contracts are only valid if they are entered into voluntarily. c. Incorrect. Moral hazards are not the second part of consideration. d. Correct. The second part of consideration is a bargained-for exchange.

3. Liz contracts with Brian. Liz agrees to cook twenty dinners for Brian, in exchange for which Brian will repair all of the plumbing in Liz’s house. In this consideration legally sufficient? a. No, because it is clear that one dinner is not worth as much as repairing all of the plumbing in Liz’s house. b. No, because this kind of bargain violates public policy. c. Yes, based on the clear lack of any bargain. d. Yes, because Liz has promised something of value.

Answers:

a. Incorrect. We are not able to say

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