(C) Promises Binding Without Consideration + (D) Enforceability

Question 1

under what circumstances is a promise enforceable despite the fact that it is not supported by consideration?

Answer 1

(1) promise to pay a debt barred by the statute of limitations or bankruptcy;
(2) promise to perform a voidable duty;
(3) promise to pay benefits received—material benefit rule; and
(4) promissory estoppel

Question 2

promise to pay a debt barred by the statute of limitations

Answer 2

a new promise to pay a debt after the statute of limitations has run is enforceable without any new consideration

Question 3

promise to pay a debt barred by the statute of limitations - new promise is express

Answer 3

when the new promise is an express promise, most states require that the new promise be in writing and signed by the debtor

Question 4

promise to pay a debt barred by the statute of limitations - new promise is implied

Answer 4

a new promise may be implied when the obligor:
(i) voluntarily transfers something of value (i.e., money, negotiable note) to the obligee as interest on, part payment of, or collateral security for the prior debt;
(ii) voluntarily acknowledges the obligee the present existence of the prior indebtedness; or
(iii) states to the obligee that the statute of limitations will not be pled as a defense

Question 5

promise to pay a debt barred by bankruptcy

Answer 5

a new promise made to pay a debt discharged in bankruptcy is enforceable without any new consideration

Question 6

promise to pay a debt barred by bankruptcy requirements

Answer 6

while there must be an EXPRESS promise to pay rather than a mere acknowledgement or partial payment of the discharged debt, the new promise need not be in writing

Question 7

promise to pay a debt barred by the statute of limitations or bankruptcy - amount obligee is entitled to

Answer 7

because it is the new promise that is enforceable and not the prior debt obligation itself, the amount to which the obligee is entitled may be less than the prior debt

Question 8

promise to perform a voidable duty

Answer 8

a new promise to perform a duty that is voidable will be enforceable despite the absence of consideration, provided that the new promise does not suffer from an infirmity that would make it, in turn, voidable

Question 9

promise to pay benefits received—material benefit rule

Answer 9

under the material benefit rule, when a party performs an unrequested service for another party that constitutes a material benefit, the modern trend permits the performing party to enforce a promise of payment made by the other party after the service is rendered, even though, at common law, such a promise would be unenforceable due to lack of consideration

Question 10

promise to pay benefits received—material benefit rule - rendering services without expectation of compensation (i.e., as a gift)

Answer 10

the material benefit rule is not enforced when the performing party rendered the services without the expectation of compensation (i.e., as a gift)

Question 11

promise to pay benefits received—material benefit rule - extent of enforceability

Answer 11

the promise is enforced only to the extent necessary to prevent injustice, and it is not enforceable to the extent the value of the promise is disproportionate to the benefit received, or the promisor has not been unjustly enriched

Question 12

promise to pay benefits received—material benefit rule - additional remedy

Answer 12

apart from a contract remedy, the provider of services may also be able to recover under a quasi-contract theory

Question 13

requested services distinguished

Answer 13

if one party requests another party to perform a service but does not indicate a price, and the service is performed, this generally creates an “implied-in-fact” contract—the party who performed the requested service is generally entitled to recover the reasonable value of her services in a breach-of-contract action in which the party who enjoyed the benefit of the services refused to pay

Question 14

requested services distinguished EXCEPTION

Answer 14

the party who performed the requested service is generally entitled to recover the reasonable value of her services in a breach-of-contract action in which the party who enjoyed the benefit of the services refused to pay—however, an EXCEPTION applies, when the services were rendered without the expectation of payment

Question 15

promissory estoppel

Answer 15

the doctrine of promissory estoppel (detrimental reliance) can be used under certain circumstances to enforce a promise that is not supported by consideration—promissory estoppel is referred to as a consideration “substitution”

Question 16

promissory estoppel requirements (3)

Answer 16

a promise if binding if:
(i) the promisor should reasonably expect it to induce action or forbearance on the part of the promise or a third person;
(ii) the promise does induce such action or forbearance; and
(iii) injustice can be avoided only by enforcement of the promise

Question 17

promissory estoppel standard of review

Answer 17

in general, the promisee must actually rely on the promise, and such reliance must have been reasonably foreseeable to the promisor

Question 18

promissory estoppel remedies

Answer 18

the remedy may be limited or adjusted as justice requires—generally, this results in the award of reliance damages rather than expectation damages

Question 19

promissory estoppel - exception to the reliance requirement for charitable subscriptions

Answer 19

courts often apply the doctrine of promissory estoppel to enforce promises to charitable institutions—a charitable subscription (i.e., a written promise) is enforceable under the doctrine of promissory estoppel without proof that the charity relied on that promise

Question 20

promissory estoppel - construction contracts

Answer 20

in the construction industry, it would be unjust to permit a subcontractor to revoke a bid after inducing justifiable and detrimental reliance in the general contractor—thus, an agreement not to revoke a sub-bid offer can be enforceable under the theory of promissory estoppel

Question 21

promissory estoppel - construction contracts: general contractor bound to accept sub-bid

Answer 21

because the sub-bid is only an outstanding offer, the general contractor is not bound to accept it upon becoming the successful bidder for the general contract—a general contractor can enter into a subcontract with another subcontractor for a lower price

Question 22

enforceability of contracts

Answer 22

a contract may be unenforceable based upon a defense to formation or a defense to enforcement—proof of defense may render the contract void or voidable

Question 23

void contracts

Answer 23

a contract results in the entire transaction being regarded as a nullity, as if no contract existed between the parties

Question 24

voidable contracts

Answer 24

a voidable contract operates as a valid contract, unless and until one of the parties takes steps to avoid it