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15 Cards in this Set
- Front
- Back
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CONSIDERATION
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Definition the inducement to enter into a contract
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LEGAL SUFFICIENCY OF CONSIDERATION
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Definition consists of either a benefit to the promisor or a detriment to the promisee
• Legal Benefit obtaining something to which one had no prior legal right • Legal Detriment doing an act one is not legally obligated to do or not doing an act that one has a legal right to do |
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Adequacy of Consideration
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not required where the parties have freely agreed to the exchange
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Illusory Promise
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promise that imposes no obligation on the promisor; the following promises are not illusory
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Not Illusory Promise
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• Output Contract agreement to sell all of one’s production to a single buyer
• Requirements Contract agreement to buy all of one’s needs from a single producer • Exclusive Dealing Contract grant to a franchisee or licensee by a manufacturer of the sole right to sell goods in a defined market • Conditional Contract a contract in which the obligations are contingent upon the occurrence of a stated event |
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Preexisting Public Obligations
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public duties such as those imposed by tort or criminal law are neither a legal detriment nor a legal benefit
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Preexisting Contractual Obligation
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performance of a preexisting contractual duty is not consideration
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Modification of a Preexisting Contract (consideration)
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under the common law a modification of a preexisting contract must be supported by mutual consideration; under the Code a contract can be modified without new consideration
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Substituted Contracts
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the parties agree to rescind their original contract and to enter into a new one; rescission and new contract are supported by consideration
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• Settlement of an Undisputed Debt
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payment of a lesser sum of money to discharge an undisputed debt (one whose existence and amount are not contested) does not constitute legally sufficient consideration
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Settlement of a Disputed Debt
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payment of a lesser sum of money to discharge a disputed debt (one whose existence or amount is contested) is legally sufficient consideration
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mutually agreed-upon exchange
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BARGAINED-FOR EXCHANGE
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Past Consideration
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an act done before the contract is made is not consideration
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CONTRACTS WITHOUT CONSIDERATION
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• Promise to Pay Debt Barred by the Statute of Limitations a new promise by the debtor to pay the debt renews the running of the statute of limitations for a second statutory period
• Promise to Pay Debt Discharged in Bankruptcy may be enforceable without consideration • Voidable Promises a new promise to perform a voidable obligation that has not been previously avoided is enforceable • Moral Obligation a promise made to satisfy a preexisting moral obligation is generally unenforceable for lack of consideration |
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Promissory Estoppel
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doctrine that prohibits a party from denying his promise when the promisee takes action or forbearance to his detriment reasonably based upon the promise
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