3. Consideration Flashcards
What is required for a promise to be enforceable?
A promise must be supported by bargained-for consideration.
Consideration involves an exchange where the promisee sacrifices something of value or limits their freedom.
What constitutes consideration?
Consideration involves exchanging a valuable promise for something else of value, like a counterpromise or performance.
A return promise must be bargained for.
What are the two conditions for a promise to be supported by consideration?
- The promisee sacrifices something of value or limits their freedom
- The promisor’s promise is in exchange for the promisee’s legal detriment.
What is a quitclaim deed in the context of consideration?
A quitclaim deed, even if the holder’s claim is doubtful, is sufficient consideration to form a contract.
What are the three forms of performance that may constitute consideration?
- An act other than a promise
- A forbearance
- Creation, modification, or destruction of a legal relation.
What can a promisor defend against in terms of gratuitous promises?
A promisor can state that the promise is not supported by consideration, there is a want of consideration, or there is legally insufficient consideration.
What does ‘failure of consideration’ mean?
A failure of consideration is a claim that the party has not performed in accordance with her promise.
What is the preexisting duty rule?
if parties to an existing contract agree to modify the contract for the sole benefit of one of them, the modification will usually be unenforceable at common law for lack of consideration.
Under the UCC, what is required for modifications of existing contracts?
The UCC explicitly removes the consideration requirement for modifications of existing contracts.
What is the legal detriment test?
A promise is supported by consideration if the promisee gives up something of value and the promisor makes a promise as part of a bargained-for exchange.
Do courts police the equivalence of bargained-for exchanges?
No, the inadequacy of consideration is no defense to a breach of contract claim.
What is an illusory promise?
An illusory promise is a statement that appears to promise something but does not actually commit the promisor to anything.
a promise to perform that leaves performance to the unlimited discretion of the promising party and WILL NOT constitute consideration.
One common kind of illusory promise occurs when a promisor reserves the right to change his mind, which does not bind the promisor and is illusory.
NOT Illusory
Specific conditions where a party has a terminate a contract-not purely based on their discretion or wish
When can an illusory promise become adequate consideration?
An illusory promise may become adequate consideration if the time during which the promisor could choose alternative performances has passed.
If the promisor’s right to change his mind is limited by some objective standard, consideration is likely to be found present and the contract upheld
What creates a binding gratuitous transfer?
Delivery of a gift with the intent to give it creates a binding gratuitous transfer, preventing the giver from retracting the gift.