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25 Cards in this Set
- Front
- Back
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Consideration (definition)
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To constitute consideration, a performance or returned promise must be bargained for. It is bargained for if it is sought by the promisor in exchange for his promise, and is given buy the promisee in exchange for that promise. The performance may consist of an act other than a promise, a forbearance, or the creation, modification, or destruction of legal relationship.
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Elements
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Legal Value
Bargain |
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Legal Value
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Each side must offer or promise to exchange something the law regards as having legal value. Legal value is either a benefit to the promisor or a detriment to the promisee
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Bargain
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The benefit or detriment must be bargained for, ie the value on each side is the agreed equivalent for that on the other side
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Sufficiency of Consideration
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Must be something that has value in the eyes of the law; courts are liberal in what they view as having value. If the parties view something as valuable, the courts will usually accept this
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Adequacy of Consideration
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Refers to the quantity of the amount exchanged; courts usually only look at this if the value are so disparate that it raises a red flag as to whether or not there was a bargain
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Two instances where adequacy matters:
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Exchange of fungible foods/money in the same currency
When it is obvious that it is a phony deal because the items exchanged are so unbalanced |
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Gift with a Condition
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Look at the relationship of the parties, the situation, intentions; the problem with a gift is the bargain part of consideration.
Similar to promissory estoppel, but in promissory estoppel, the offeror has an alternative motive for the action sought and typically receives a benefit |
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Pre-Existing Duty Rule
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If a party promises to do something that he is already legally obligated to do, or refrains from something he is legally obligated to refrain from, the party has not incurred detriment and there is no consideration
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Adhesion Contract Questions
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Any negotiations?
Consequences explained? Disparity in bargaining power? Difference in business experience? |
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Option Contract
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Right to have the offer left open (time to accept offer)
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Past Consideration
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An act done or promise given by a promisee before making a promise is not consideration for a new promise because it has not been given in exchange for this promise
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Promissory Estoppel
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A promise made without consideration may nonetheless be enforced to prevent injustice if the promisor should have reasonably expected the promisee to rely on the promise and if the promisee did rely on the promise to his detriment
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Elements of Promissory Estoppel
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Promise
Foreseeable Reliance Reasonable Reliance Injustice Absent enforcement |
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Illusory Promise
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Valueless promise; allows one person to not honor the promise.
Ex: "I'll buy your car if I feel like it" Things like good faith or reasonable notice can be enough to keep a promise from being illusory Essentially, it is when the agreement does not force the other party to perform |
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Requirements and Output Contracts
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These are NOT illusory because of an implied condition of good faith; implied condition of reasonable notice, etc.
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Forbearance as Consideration
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Forbearance (not doing something)
Forbearance to assert a claim or defense is valid |
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Forbearance to assert or the surrendering of a claim or defense which proves to be invalid is not consideration unless:
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The claim or defense is in fact doubtful because of uncertainty as to the facts or the law, or
The forbearing or surrendering party believes that the claim or defense may be fairly determined to be valid |
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Past Due Monetary Debts
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Creditor (promisor) taking less than is owed by debtor (promisee) violates the preexisting duty rule. If something is added though, like faster payment, this is a new detriment to the promisee and benefit to promisor, so it is okay
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Accord
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Agreement to settle a claim for something else that is agreed upon
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Accord and Satisfaction
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Agreement to substitute for an existing debt some alternative form of discharging the debt, coupled with the actual discharge of the debt by substitute performance.
New agreement = accord Discharge = satisfaction |
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Substituted Contract
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Something the parties agree upon to satisfy the old debt that replaces the old debt
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The Option to Cancel (Illusory Promise)
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Seems illusory, but courts will often read in some limitation on the free right to cancel.
Ex: When the US does not give notice they are going to cancel on a job. Courts want to see the other side give notice |
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Restitution Factors (Past Consideration)
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Benefitto me
Expectationof the benefactor to be paid Commonpractice or usage of trade Knowledgeon my part that the benefit is not being conferred gratuitously Easeon benefactor’s part of making a contract and on my part of saying “no” *difference between doctor saving your life and violinist serenading you |
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Defenses to an implied in fact agreement (defenses to restitution)
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Gratuitous-- Compensation isn’t due because it wassomething that was intended to be free
Officiousness--Forced on you when you didn’t want it inthe first place |
