Consideration in Contract Law: Definition, Types, and Significance

Question 1

What is the primary significance of consideration in contract formation?

Accepted Answer

Determines whether a contract is legally binding

Answer

Indicates the value of the contract

Answer

Prevents parties from withdrawing from a contract

Answer

Ensures that both parties receive equal benefits

Question 2

Which of the following is an example of past consideration?

Accepted Answer

Paying for goods after they have been delivered

Answer

Promising to pay for goods that have yet to be delivered

Answer

Providing a service in exchange for a promise to pay

Answer

Receiving a gift in exchange for a promise to provide a service

Question 3

What is the key difference between executed and executory consideration?

Accepted Answer

Executed consideration has been performed, while executory consideration has not

Answer

Executed consideration is valuable, while executory consideration is not

Answer

Executed consideration is legal, while executory consideration is not

Answer

There is no difference between executed and executory consideration

Question 4

What is the primary distinction between a condition precedent and a condition subsequent?

Accepted Answer

A condition precedent must be fulfilled before a contract becomes effective, while a condition subsequent terminates a contract if it occurs

Answer

A condition subsequent must be fulfilled before a contract becomes effective, while a condition precedent terminates a contract if it occurs

Answer

There is no difference between a condition precedent and a condition subsequent

Answer

A condition precedent is a type of warranty, while a condition subsequent is a type of representation

Question 5

Which of the following is NOT a characteristic of consideration?

Accepted Answer

It must be in writing

Answer

It must be of value

Answer

It must be bargained for

Answer

It can be present or future

Question 6

Which of the following is NOT recognized as a valid type of consideration in contract formation?

Accepted Answer

Mere expression of gratitude or appreciation

Answer

Performance of an act or service

Answer

Transfer or conveyance of property

Answer

Promise to perform an act in the future

Question 7

Which of the following statements accurately describes a key characteristic of consideration?

Accepted Answer

It must be something the promisor is not already legally obligated to do.

Answer

It must be of equal or greater value than the promise it supports.

Answer

It must be provided by the party to whom the promise is made.

Answer

It must provide a benefit to both the promisor and the promisee.

Question 8

In which of the following scenarios would consideration be considered lacking, rendering the contract potentially unenforceable?

Accepted Answer

C promises to give D a ride to the airport as a favor.

Answer

A promises to pay B £100 for painting their house.

Answer

B agrees to sell their car to C for £5,000.

Answer

D promises to repay E a loan of £2,000 in accordance with their prior agreement.

Question 9

Which court is primarily responsible for developing and shaping the doctrine of consideration in English common law?

Accepted Answer

House of Lords, the highest court in the UK

Answer

Court of Appeal, an intermediate appellate court

Answer

High Court of Justice, a court of first instance

Answer

Magistrates' Court, a lower-level court dealing with minor offenses

Question 10

Which of the following would NOT be considered valid consideration in the formation of a contract?

Accepted Answer

A promise to commit a criminal offense

Answer

A payment of £100

Answer

A promise to construct a building

Answer

A promise to refrain from taking legal action

Question 11

What is a key distinction between consideration and a gift?

Accepted Answer

Consideration is legally enforceable, whereas a gift is not.

Answer

A gift can be revoked, but consideration cannot.

Answer

Consideration must have economic value, while a gift does not.

Answer

A gift requires a written document, but consideration does not.

Question 12

Which exception does NOT apply to the requirement of consideration in contract formation?

Accepted Answer

Past consideration

Answer

Promissory estoppel

Answer

Estoppel by representation

Question 13

In contract law, what determines whether consideration is sufficient?

Accepted Answer

Consideration is sufficient if it has some value, even if it's minimal.

Answer

Consideration must be of equal value to the other party's performance.

Answer

Courts always assess the fairness of consideration before deeming it sufficient.

Answer

Consideration must be paid in money or other tangible goods.

Question 14

Which type of consideration involves an exchange of value at the time the promise is made?

Accepted Answer

Executed consideration

Answer

Past consideration

Answer

Executory consideration

Answer

Moral consideration

Question 15

In which situation is past consideration valid?

Accepted Answer

When it is part of a subsequent agreement

Answer

When it is executed contemporaneously with the promise

Answer

When it is executed before the promise

Answer

When it is promised in exchange for a past act

Question 16

Which of the following is a requirement for adequacy of consideration?

Accepted Answer

It must have some value, even if nominal

Answer

It must be fair and equivalent to the promise

Answer

It must be tangible

Answer

It must be greater in value than the promise

Question 17

In which type of contract is consideration not necessarily required?

Accepted Answer

Unilateral contract

Answer

Void contract

Answer

Executed contract

Answer

Bilateral contract

Question 18

Which of the following statements about consideration is accurate?

Accepted Answer

It can be anything of value, including a promise or an act

Answer

It is not necessary for a valid contract

Answer

It must always be in writing

Answer

It is always implied in contracts

Question 19

Which of the following is a consequence of a lack of consideration?

Accepted Answer

The contract is void

Answer

The contract remains enforceable

Answer

The contract is voidable

Answer

The contract is valid but unenforceable

Question 20

In which case does the doctrine of promissory estoppel create a binding obligation despite a lack of consideration?

Accepted Answer

When a promise is made and reasonably relied upon to the detriment of the promisee

Answer

When a promise is made in writing

Answer

When a promise is made under seal