Consideration in Contract Law: Exchange of Value Explained

Question 1

In contract law, consideration refers to:

Accepted Answer

An action, promise, or restraint given in exchange for a promise

Answer

A promise to act in the future

Answer

Something valuable given to one party in a contract

Answer

A benefit received by one party in a contract

Question 2

A promise to pay for something that has already been received is considered:

Accepted Answer

Past consideration and is not valid consideration

Answer

Present consideration and is valid consideration

Answer

Executed consideration and is valid consideration

Answer

Executory consideration and is not valid consideration

Question 3

Which of the following can be valid consideration in a contract?

Accepted Answer

Any act or promise that is of value to the promisor and not otherwise legally enforceable

Answer

Only payment of money or transfer of property

Answer

Any act or promise that is already legally enforceable

Question 4

Which of the following is an example of forbearance being used as consideration?

Accepted Answer

A landlord agreeing not to evict a tenant in exchange for the tenant paying rent

Answer

A person selling their car for $10,000

Answer

A company hiring a new employee

Question 5

What is the distinction between executed and executory consideration?

Accepted Answer

Executed consideration has already been performed, while executory consideration is yet to be performed

Answer

Executed consideration is binding on both parties, while executory consideration is not

Question 6

How does a gratuitous promise differ from a contract?

Accepted Answer

A gratuitous promise lacks consideration, while a contract has consideration

Answer

A gratuitous promise is legally binding, while a contract is not

Answer

A gratuitous promise is made in writing, while a contract is not

Question 7

What is the legal consequence of a contract that lacks consideration?

Accepted Answer

It is not legally binding

Answer

It is binding on both parties but can be rescinded by either party

Answer

It is only binding on the promisor

Answer

It is binding on the promisee but not the promisor

Question 8

In which circumstances would a promise be considered enforceable despite a lack of consideration?

Accepted Answer

Promissory estoppel

Answer

Unjust enrichment

Answer

Implied contract

Answer

Common law restitution

Question 9

In the case of bilateral contracts, consideration is exchanged:

Accepted Answer

Simultaneously

Answer

After the contract is performed

Answer

Before the contract is formed

Question 10

Which of the following is NOT a characteristic of good consideration?

Accepted Answer

Past consideration

Answer

Mutuality

Answer

Legality

Answer

Adequacy

Question 11

Which of the following is an example of a liquidated damages clause?

Accepted Answer

A fixed sum to be paid in the event of breach of contract

Answer

A promise to negotiate in good faith

Answer

A court order requiring specific performance

Question 12

In order to be enforceable, a liquidated damages clause must:

Accepted Answer

Be a genuine pre-estimate of the likely loss

Answer

Be agreed upon after the breach occurs

Answer

Penalize the breaching party

Answer

Be approved by a court

Question 13

The doctrine of anticipatory breach occurs when:

Accepted Answer

One party indicates an intention not to perform before the due date

Answer

Both parties agree to terminate the contract

Answer

One party fails to perform a contractual obligation

Question 14

In which case would an existing legal obligation NOT constitute valid consideration?

Accepted Answer

When the obligation is already owed to the promisor

Answer

When the obligation is burdensome to the promisee

Answer

When the obligation is a present duty to a third party

Question 15

Which of the following is an example of executed consideration?

Accepted Answer

Payment of money

Answer

Promise to pay money

Answer

Forbearance from suing

Question 16

What is the significance of consideration in contract law?

Accepted Answer

It creates a legally binding obligation.

Answer

It determines the terms of the contract.

Answer

It prevents unfair advantage being taken.

Answer

It ensures that both parties receive equal benefit.

Question 17

In the case of Foakes v Beer, what was the legal issue regarding consideration?

Accepted Answer

Whether part payment of a debt could discharge the full obligation.

Answer

Whether an existing legal obligation could constitute consideration.

Answer

Whether a promise to forbear from suing could be valid consideration.

Question 18

In which situation would an act of forbearance constitute valid consideration?

Accepted Answer

When the forbearance is requested by the promisor and is a detriment to the promisee.

Answer

When the forbearance is a moral obligation of the promisee.

Answer

When the forbearance is of equal value to the promise.

Question 19

What is the difference between executed and executory consideration?

Accepted Answer

Executed consideration has already been performed, while executory consideration is yet to be performed.

Answer

Executed consideration is a benefit to the promisor, while executory consideration is a detriment to the promisee.

Question 20

Which of the following statements about consideration is true?

Accepted Answer

It can be anything of value, including acts, promises, or forbearance.

Answer

It must be proportionate to the value of the promise.

Answer

It must be something that the promisor specifically requested.

Question 21

In the case of Stilk v Myrick, what was the issue regarding consideration?

Accepted Answer

Whether a promise to do something that one is already contractually bound to do can constitute valid consideration.

Answer

Whether past consideration can be valid.

Question 22

Which of the following is NOT considered an essential element of consideration?

Accepted Answer

Past consideration

Answer

Mutuality of obligations

Answer

Legality of the consideration

Answer

Value in the eyes of the law

Question 23

Under the 'existing legal duty' rule, a promise to perform an existing legal obligation is considered:

Accepted Answer

Not good consideration

Answer

Partial consideration

Answer

Good consideration

Answer

Adequate consideration

Question 24

In the scenario below, what constitutes the consideration provided by David? Sarah promises to pay her friend, David, £100 if he helps her move house. David agrees and moves the furniture.

Accepted Answer

David's agreement to move the furniture

Answer

Sarah's promise to pay £100

Answer

The friendship between Sarah and David

Answer

The furniture being moved

Question 25

What is the significance of the 'practical benefit' doctrine in contract law?

Accepted Answer

An exception to the 'existing legal duty' rule where a party receives a practical benefit from performing their existing duty

Answer

A requirement that consideration must be of monetary value

Question 26

In the landmark case Williams v Roffey Bros & Nicholls (Contractors) Ltd, what element made the promise to pay extra enforceable?

Accepted Answer

The practical benefit received by the defendant

Answer

The plaintiff's financial hardship

Answer

The defendant's existing legal duty to complete the work

Answer

The plaintiff's promise to complete on time

Question 27

Which of the following is NOT a characteristic of sufficient consideration?

Accepted Answer

It must be of equal or greater value than the promise given

Answer

It must be something given in exchange for a promise

Answer

It must be bargained for

Answer

It must be something of value in the eyes of the law

Question 28

Under the 'existing legal duty' rule, a promise to perform a legal obligation that one is already obligated to do is considered:

Accepted Answer

Not good consideration

Answer

Sufficient consideration

Answer

Partial consideration

Answer

Good consideration

Question 29

In which scenario would consideration be considered 'past'?

Accepted Answer

You promise to pay a friend £50 for helping you move house after they have already assisted you

Answer

You agree to buy a car for £10,000 and pay the seller upon delivery

Answer

You promise to pay a builder £1,000 to build a shed, and the builder agrees