2B Consideration

Question 1

§ 71. Requirement of Exchange

Answer 1

(1) To constitute consideration, a performance or a return promise must be bargained for.

(2) Bargained-for-exchange
- 1) Did A seek B’s performance/return promise in exchange for his promise?
- 2)Did B give his performance/return promise in exchange for A’s promise?

Question 2

§ 79. Adequacy of Consideration

Answer 2

If the requirement of consideration is met, there is NO additional requirement of

(a) a gain, advantage, or benefit to the promisor
or a loss, disadvantage, or detriment to the
promisee; or
(b) equivalence in the values exchanged[.]

Question 3

Hamer v Skidway special Consideration rule

Answer 3

Benefit/ detriment test

Did the X’s action constitute a benefit to Y or a detriment to X?

Did X’s actions induce Y to make the promise?

Question 4

Pennsy Supply v American Ash consideration test

Answer 4

(1) Did the promisee’s performance/return promise constitute a benefit to the promisor OR a detriment to the promisee?
(2) Did the promisor seek the promisee’s performance/return promise in exchange for his promise?
(3) Did the promisee give his performance/return promise in exchange for the promisor’s promise?

Question 5

§ 25. Option Contract

Answer 5

An option contract is a promise which meets
the requirements of a contract and limits the
promisor’s power to revoke an offer.

Question 6

§ 87. Option Contract

Answer 6

(1) An offer is binding as an option contract if it

(a) is in writing and signed by the offeror, recites a purported consideration for the making of the
offer, and proposes an exchange on fair terms
within a reasonable time[.