Section III. MULTIPLE CHOICE. (Max. 30 Points)

This section contains 10 multiple choice questions. Choose the response for each question that is most accurate and write its corresponding letter in the space provided. Each correct response in this section is worth three (3) points.

A_. In which of the following scenarios would the agreement MOST LIKELY be declared to be unenforceable as an illusory promise?

1. An oral contract for the sale of real estate.

2. A written contract for the lease of a commercial premises that contains a one-year term and permits cancellation upon non-payment and thirty (30) days notice by the Tenant to the Landlord.

3. A contract for professional services that permits cancellation upon notice by one of the parties at any time in its sole discretion.

4. All of the above agreements are likely to be unenforceable as illusory promises.

B. _______. During a furlough from her work, LuAnn maxed out her credit card, hitting her limit of $6,000 while awaiting her return to work. Despite her expectations, LuAnn was not called to return to work for six months. After maxing out her credit card, LuAnn made two minimum payments of $150.00 before defaulting on her card. When the card issuer sent LuAnn a notice advising that there was a balance of $5,700 now due in full with interest, LuAnn called the company, explained her situation and made an agreement with the card issuer to make six payments of $500 to settle her outstanding debt. When LuAnn missed the last four payments, the card issuer demanded full payment of the outstanding balance of $4,700 plus interest and penalties under the original card agreement. When the credit card company sues LuAnn for the outstanding balance of $4,700 plus interest and penalties, what will be the likely result?

1. The credit card company will be awarded a judgment against LuAnn but only for $2,000 because of the companys agreement to settle LuAnns pre-existing debt.

2. The credit card company will be awarded a judgment against LuAnn for the outstanding balance of $4,700 under the original card agreement because there was no valid consideration given by LuAnn under the settlement and she owed the pre-existing debt.

3. The credit card company will lose the case against LuAnn because it waived its right to sue her by entering into a settlement.

4. None of the above are likely outcomes.