3. Consideration Flashcards
What is the purpose of identifying consideration?
To be able to hold the other party to a promise.
What are the two types of consideration?
Executory consideration (promise) and executed consideration (act).
What is the difference between bilateral and unilateral contracts?
Bilateral contracts involve an exchange of promises, while unilateral contracts involve a promise in return for an act.
What are the requirements for valid consideration?
Cannot be in the past, must move from promisee, need not be adequate, and must be sufficient.
Under what conditions can past consideration be considered valid?
If done at the promisor’s request, with a mutual agreement for compensation, and if the promise would have been legally enforceable if made in advance.
What is the requirement for adequacy of consideration?
It must have some value, but does not have to be equal in value.
What is the requirement for sufficiency of consideration?
The amount does not matter, but the type of consideration provided must be appropriate for a bargain.
When can a contract not be enforced due to lack of consideration?
When there is no consideration provided.
What are the elements required for contractual variations?
Agreement, consideration, and intention to make the variations binding.
When is consideration considered sufficient for contractual variations?
When there is a benefit to one party and a detriment to the other.
Is performance of an existing contractual duty sufficient consideration for extra payment?
No, it is not.
When does exceeding a contractual duty become consideration?
When it confers a practical benefit.
Can an existing duty be considered consideration for a promise of extra payment made under duress?
No, it cannot.
What is Pinnel’s Rule?
An agreement to accept part payment in full and final settlement is not binding on the creditor.
What is the exception regarding consideration?
Consideration must be sufficient but not necessarily adequate.
What is the requirement for part payment of debt to be considered sufficient consideration?
Creditor must request new payment or accept less from a third party.
What is Promissory Estoppel?
Creditor may be estopped from going back on a promise, even without consideration, if it would be unfair.
When can Promissory Estoppel be used?
As a defense against a party trying to enforce a legal right.
What must the claimant show in order to use Promissory Estoppel?
Reliance on the promise.
What is the effect of Promissory Estoppel?
It waives the legal right.
What happens to the legal right in the case of periodic payments?
It is suspended and can be resumed by the creditor with reasonable notice.
