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21 Cards in this Set
- Front
- Back
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2 Elements of Consideration:
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1) Something of Legal Value
2)Bargain for Exchange |
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Legal Value can mean:
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-promise
-performance -refraining from doing something that one could otherwise do |
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-the promise must be either:
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1) legally detrimental to the promisee
2) legally beneficial to the promisor |
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Agreements that lack consideration:
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1) Preexisting duty
2) Past Consideration 3) Illusory promises 4) Settlement Claims |
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-A promise to do what one already has a duty to do is not consideration.
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Preexisting Duty
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exceptions to preexisting duty
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-unforeseen difficulties
-Recession and New Contract |
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-promises made with respect to events that hve already taken place are unforceable
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Past consideration
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-if the terms of a contact express such uncertainty of performance that the promisor has not definitely promised to do anything...the proise is without consideration and unenforceable
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illusory promises
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Examples of illusory promises:
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1) Option-to-cancel clauses
2) Requirements and output contracts |
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Reserving, in a contract, the right to withdraw at any time can be an illusory promise. (If the right is at all restricted, however such as requiring 30 days' notice, there is consideration)
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option-to-cancel clauses
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Problems of consideration may arise in these circumstances because of the uncertainty of performance.
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Requirements and Output Contracts
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- a debtor may offer to pay, and a creditor may agree to accept, less than the amount of a debt...in order for this to happen, the amount of the debt must be in dispute
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accord and satisfaction
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-the agreement under which one of the parties undertakes to give or perform, and the other to accept, in satisfaction of a claim, something other than what was originally agreed on
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accord
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-this occurs when an accord is executed
-this cannot happen without an accord |
satisfaction
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-acceptance of less than the entire amount of a liquidated debt is not satisfaction, and the balance of the debt is still owed
-no consideration is giben by the debtor, because the debtor has a preexisting obligation to pay the entire debt |
liquidated debt-no consideration
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-when the amount of the debt is in dispute, acceptance of a lesser sum discharges the debt
-consideration is given by the parties giving up a legal right to contest the amount of debt |
unliquidated debt-consideration
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Settlement of Claims (3):
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1. Accord and satisfaction
2. release 3. Covenant not to sue |
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-bars any further recovery beyond the terms stated in the release
-a promise to refrain from suing on a valid claim -generally binding if: 1) given in good faith 2) stated in a signed writing 3) accompanied by consideration |
Release
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-The parties substitue a contractual obligation for some other type of legal action based on a valid claim
-if the obligation is not met, an action can be brough for breach of contract |
Covenant not to sue
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-under this doctrine also known as DETRIMENTAL RELIANCE, a person who relies on the promise of another may be able to recover in the absence of consideration
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Promissory Estoppel
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Requirements to State a Claim for Promissory Estoppel:
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a) The promise was clear and definite.
b) The promisor knew or had reason to believe that the promisee would likely rely on the promise. c) The promisee acted or refrained from acting in reasonable reliance on the promise. d) The promisee's reliance resulted in substantial detriment e) Justice will be better served by enforcement of the promise |
