Contracts-4-Performance Of A Preexisting Legal Duty As Consideration; Modification And Waiver Of Contractual Duties.

Front 1

k) Performance of a preexisting legal duty as consideration; modification and waiver of contractual duties. ii) Accord and satisfaction iii) Modification

Front 2

Ex: Where A offers B $500 to perform some act, and B is already under a preexisting legal duty to perform that act for the benefit of A, is B’s performance sufficient consideration to support A’s promise? Why?

Back 2

(a) B’s performance is not sufficient consideration to support A’s promise because B’s performance imposes no legal detriment ton B (he or she is already under the duty to perform the act)

Front 3

How does GRAY V. MARTINO [police officer duty case] illustrate PERFORMANCE OF A PREEXISTING LEGAL DUTY AS CONSDIERATION—COLLECTION OF A REWARD?

Back 3

(a) Gray, P was a police officer that heard of an award for finding and arresting the thief’s of stolen jewelry. He found and arrested them and claimed the award. (b) Held: A public official may not claim a reward for performing her already existing duty. (c) It is presumed that P was acting in his official capacity. Public policy dictates this. (d) There are two arguments for this: (i) Public policy (ii) No consideration (no legal detriment to the promise. He was doing what he was supposed to do in his official capacity)

Front 4

If two parties have a contract under which one is contractually obliged to perform some act, will his new promise to perform that same act or his actual performance of that act constitute consideration for a promise by the other to pay a greater amount for the performance than was agreed to in the original contract?

Back 4

(a) No.

Front 5

How does LINGENFELDER V. WAINWRIGHT BREWERY CO illustrate how CONSTRUCTION CONTRACTS relates to SUFFICIENT CONSIDERATION?

Back 5

(a) D employed Jugenfied to supervise and design the construction of some buildings. Jungenfeld then stopped working the buldings. D then accepted additional money to have him continue which he accepted. (b) Then D refused to pay the money. (c) Held: Jungenfeld’s performance of work he was already under contract to perform is NOT sufficient consideration for promise of a bonus. (d) D should have sued for damages. However, Jungfeld did a greater wrong by taking advantage of D’s necessities. Like sailors who want more pay from their captain when in the open ocean.

Front 6

How does FOAKES v. BEER illustrate the EARLY RULE for SUFFICIENT CONSIDERATION?

Back 6

(a) Foakes owed Beer lots of money. They made an agreement where P agreed not to college interest on the debt if D made a partial payment immediately and paid the remainder of the debt (b) HELD: Advance payment of part of a debt is NOT sufficient consideration for a discharge of interest otherwise due on the debt. Performance of a preexisting duty (payment of a debt) is not sufficient consideration to support a new promise not to collect interest (c) TODAY: early payment may be held to constitute adequate consideration to support a promise.

Front 7

How does AUSTIN INSTRUMENT, INC v. LORAL CORP illustrate about DURESS?

Back 7

(a) Subcontractor pulls out unless company consents to substantial increases in the prices provided for in the agreement. Unlabe to localte an alternate supplier. (b) HELD: A contract modification is not enforceable if it is executed under threat of economic duress. (c) FOR ECONOMIC DURESS: there must be a wrongful threat to the victim that deprives the victim of its free will in the transaction. (d) The normal legal remdy of accepting P’s breach and tehn suing for damages would have been inadequate. (e) D reneging on the contrct could jeopardize its chances for future govemrent grants.

Front 8

If the parties agree to rescind the original contract first, what specific kind of contract would be enforceable

Back 8

(a) A subsequent contract calling for the same performance at a higher price is enforceable [if the parties agree to rescind the original contract first].

Front 9

How do courts typically hold that perforamcne of a contractual duty can be consideration?

Back 9

(a) If the duty is not owed to the promisor, subject to the duress exception [, courts tend to hold that performance of a contractual duty can be consideration]

Front 10

Define: ACCORD

Back 10

(a) An Accord is an executory agreement to discharge an existing contractual duty.

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Define: SATISFACTION

Back 11

(a) A satisfaction is the performance of an accord agreement, which discharges both the accord agreement and the prior contractual duty

Front 12

What are the 3 rules regarding CONSIDERATION for ACCORD and SATISFACTION of a claim disputed as to the amount?

Back 12

(a) Payment in full satisfaction of a disputed claim discharges the entire claim; (b) Payment of an undisputed part of a claim does not discharge the entire claim because a debtor’s refusal to pay the full claim does not make the claim disputed; (c) When the amount of a debt is disputed but a directly related offset is claimed, the debt is a single claim which is disputed in amount.

Front 13

Is an EXECUTORY (unperformed) accord enforceable by either party? [where the parties may agree to settle a case through accord and satisfaction, but then the creditor may insist on payment before the debtor has performed the satisfaction agreed to.]

Back 13

(a) Such an executory (unperformed) accord is unenforceable by either party. (b) Some EXCEPTIONS largely overcome the rule

Front 14

Where an original contract is an UNDISPUTED, LIQUIDATED, and MATURE OBLIGATION TO PAY MONEY, what is the new agreement more likely to be deemed as?

Back 14

(a) An ACCORD

Front 15

Even if a new agreement is an accord, what may it have the effect of?

Back 15

(a) It may have the effect of suspending the obligations under the old contract (b) It does not discharge the previous claim, but the creditor cannot sue on the original claim as long as the debtor has not breached the accord

Front 16

Under what special consideration do some states make an executory accord enforceable?

Back 16

(a) As long as it is in writing and signed by the debtor.

Front 17

When parties to an agreement may decide to settle a dispute by rescinding the existing contract and forming a new one, is it an accord and satisfaction?

Back 17

(a) Yes.

Front 18

Define: MODIFICATION

Back 18

(a) Modification (or alteration) is a change in the obligation of one of the parties (or both) by a subsequent modifying agreement. Such a change does not discharge the entire original contract, but it does alter the terms and performance therof, and it may operate it discharge certain duties provided for in the original contract.

Front 19

How can a MODIFICATION be BINDING?

Back 19

(a) A modification is binding if it is FAIR and EQUITABLE in view of circumstances not anticipated by the parties when they made the contract.

Front 20

How can CONSIDERATION be found in a MODIFICATION of a contract?

Back 20

(a) Consideration may be found in the surrender by each party of his right to enforce the contract as it originally existed. (b) There may be a failure of consideration if the change benefits only one party.

Front 21

What is the UCC approach to DETERMINING a VALID MODIFICATION?

Back 21

(a) The UCC requires only “good faith”; consideration is not required [UCC §§1-203, 2-103, 2-209]

Front 22

How is a VOUNTARY AGREEMENT IN RESPONSE TO UNANTICIPATED CIRCUMSTANCES an example of MODIFCIATION in ANGEL V. MURRAY?

Back 22

(a) Murray the trash official modified a contract for more wages when the city’s population grew enormously and unexpectedly over the years of a contract. (b) HELD: a modification of a contract in response to unanticipated difficulties in performance IS enforceable even where there is no consideration for the modification, if the parties agree voluntarily. (c) The PREEXISTING DUTY RULE holds that a modification is a separate contract that must be supported by consideration in order to be enforced. (d) The preexisting duty rule is INAPPROPRIATE where, as here, the parties voluntarily agree to modify the contract, before it is fully performed, in response to UNANTICIPATED circumstances. The modification must be fair.

Front 23

Is a promise by a debtor to pay less than the full amount he owes to his creditor, in exchange for the creditor’s agreement to accept a lesser amount in full satisfaction or discharge of the entire debt consideration?

Back 23

(a) NO.

Front 24

What is the line of authority concerning the effect of payment of a lesser amount than is due in contracts involving an ongoing performance by both parties (eg: payments of reduced rentals under a lease?)

Back 24

(a) There is a SPLIT OF AUTHORITY

Front 25

A agrees to take out a loan to pay S, provided that S agreed to take a lesser amount. Is there sufficient consideration on both sides? Why?

Back 25

(a) Yes. A’s agreement to incur a separate debt to pay S constituted sufficient consideration.

Front 26

When may payment of a lesser sum than that owed constitute consideration for a discharge in full? [related to bankruptcy]

Back 26

(a) When the purpose in agreeing to give a full discharge was to induce A not to declare bankruptcy.

Front 27

Where has it been written that a written release by the creditor will operate to extinguish the original debt?

Back 27

(a) Statues in several states.