Which of the Following Agreements Is Not Supported by Consideration

question 14

Multiple Choice

Which of the following agreements is not supported by consideration?

• A) Barney's wife, Tina, tells him that she wants a divorce. In order to prevent her from winning a substantial award in the separation, he agrees with Fred, his business partner, to sell his part of the business to him for £1.
• B) Betty contracts with Albert to dig a swimming pool in her back yard for £12,000. After Albert has only excavated two feet, he discovers the ground is solid granite and the whole project will cost four times as much as planned. Albert proposes using the excavated site to build a fishpond for £2,000, which Betty agrees to.
• C) Jane is selling her car. Howard offers to pay £3,000 in cash to Jane and to make payment within a week, which Jane agrees to. However, Howard then receives an unexpected bill for roof repairs and so cannot afford to pay for the car immediately. He offers to pay £2,000 'take it or leave it', with payment by instalments over 3 months. Jane accepts.
• And says that he will only be able to pay in 2 months
• D) All of the above.

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Definitions:

Long-Term Investments

Assets that a company intends to hold for more than one year, such as stocks, bonds, real estate, or other financial instruments.

Fair Value

An estimate of the appropriate value of an asset or liability based on current market conditions.

Available-For-Sale

A classification for financial assets implying that they can be sold in the future; these assets are not necessarily held till maturity and their unrealized gains or losses are generally reported in other comprehensive income.

Trading Debt Securities

Refers to the buying and selling of debt instruments such as bonds in the financial markets, aiming for profits from changes in their prices.