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10 Cards in this Set

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- Legal value (not necessarily "economic" or monetary value)

- Bargained for, and

- Given in exchange for an act or a promise

- Purely gratuitous promises are not enforceable since they are not supported by consideration

Legal Value of Consideration

- Consideration can be:

-- Doing an act (unilateral contract), or

-- Promising to do an act (bilateral contract)

-- That the promise has no prior legal duty to do (i.e., the he does not have to do)

-- Promisee may also refrain from doing, or promise not to do, something that he has the legal right to do.

Bargained-For Exchange

- A promisee's act or promise must have been bargained for and given in exchange for the promisor's promise.

Illusory Promise

- If promisee's promise really does not bind promissor to do or refrain from doing anything, promise is illusory and cannot be consideration

Preexisting Duties

- As a general rule, promising to perform a preexisting duty is not consideration. Promisor in such a case has effectively made a gratuitous promise.

Contract Modification

- Includes preexisting contractual duties:

-- General common law rule is an agreement to modify an existing contract requires mutual consent and new consideration

Modifications to a sale-of-goods contract

- CISG & UCC: Agreement to modify a new contract for the sale of goods, no new consideration.

Preexisting Duties & Agreements to Settle Debts

- Liquidated debts are debts in which parties have no good faith dispute about the existence or amount of the debt.

- A creditor's promise to discharge a liquidated debt for part payment of the debt at or after its due date is unenforceable for lack of consideration

- However, if debtor offers to do something he has no preexisting duty to do (i.e., repay the loan early), creditor's promise is enforceable

- Unliquidated debts are debts in which there is a good faith dispute about the existence or amount of the debt.

-- Settlement of an unliquidated debt is known as an accord and satisfaction, accord and satisfaction settlement agreements are enforceable

Past Consideration

- an act that was performed, or a benefit given, in the past that was not bargained for or given in exchange for the current promise, thus it cannot be consideration

Exceptions to Consideration Requirement

- Promissory Estoppels - a promise that the promisor should be reasonable except to induce reliance;

-- Reliance on the promise as a result of that reliance because the promisor did not do what he promised to do