Contracts - Consideration (Chapter 12)

Front 1

What is consideration?

Back 1

Legal value, bargained for and given in exchange for an act or a promise.

Front 2

What happens if a promisor does not ask for anything in return for their promise or what they ask for does not have legal value?

Back 2

Then the promise is not enforceable because it is not supported by consideration.

Front 3

Legal value: in the case of Hamer vs. Sidway in 19th century, what method of providing legal value is demonstrated?

Back 3

The nephew refrained from doing things he had a legal right to do. If the promisee refrains from doing something he has legal right to do in exchange for promisor's promise, that provides legal value.

Front 4

What if the item bargained for has little or no actual/economic value?

Back 4

Legal value does not concern itself with actual value of the consideration. You have freedom to make bad bargains.

Front 5

How is adequacy of consideration determined in order for it to constitute a consideration? (three qualifications)

Back 5

1. If inadequacy is evident on the face of the agreement, this is a gift and is unenforceable.
2. if the consideration is grossly inadequate, this could indicate fraud, duress, lack of capacity, unconscionability, or other reason to set aside a contract.
3. nominal consideration ($1 for a car) is usually not enforced by the court.

Front 6

Bargained-for exchange: describe

Back 6

The promisee's act or promise must have been bargained for and given in exchange for the promisor's promise. In other words, it is the price the promisor asked for.

Front 7

Illusory promises - describe

Back 7

If the promisee's promise is illusory because it does not bind the promisee to do or refrain from doing anything, it does not serve as consideration. It lacks "mutuality of consideration"

Front 8

Preexisting duties - name two types of preexisting duties that do not constitute consideration.

Back 8

1. Public duties of public officials
2. preexisting contractual duties

Front 9

UCC Code's treatment of preexisting duties and consideration: in addition to firm offers, what is the other situation that dispenses of the consideration requirement?

Back 9

According to the UCC Code, an agreement to modify a sale of goods contract needs no consideration to be binding.

For example, vendor can reduce the price per item due to market conditions without any consideration.

Front 10

What are the two types of debt?

Back 10

1. Liquidated debt: the existence and the amount of the debt is not disputed.

2. Unliquidated debts - a good faith dispute about the existence or the amount of the debt makes the debt unliquidated.

Front 11

What is the term for the settlement of unliquidated debt?

Back 11

Accord and satisfaction.

When accord and satisfaction has occurred, creditor cannot recover the remainder of debt allegedly due.

Front 12

Past consideration: is it consideration?

Back 12

No.

Past consideration was given in the past for something other than the promise currently in question.

Front 13

Promissory estoppel: describe

Back 13

Promise that induces detrimental reliance. It would be unfair to not enforce the promise because the promissor reasonably should have known that they cause the promissee to rely on the promise.