CH 7 Revised Flashcards
What is a Bargain? What is Consideration?
Consideration > the price for which the promise of the other is bought
ie. some right, interest, profit or benefit accruing to the one partty or some forbearance, detriment, loss or responsibility given, suffered oor undertaken by the other?
What are gratuitous promises? What is an example?
A promise that does not have consideration. Is unenforceable. example. pledge to a charity is not enforeable.
example page 147. Marquis.
Note: A gift is different. 1) intention to give 2) delivery, and 3) acceptance
What is the role of the law regarding gratuitous
The law does not prevent performance of a gratuitous promise. It simply does nothing to help if the promisor does not perform; the promisee has no legal remedy
Who is responsible for ensuring the adequacy of consideration?
Not the court. the court will only look for some detriment and some benefit. You are free to make a bad deal as much as you are free to make a good deal.
However, if there is something that looks unfair (grossly inadequate) the courts may be concerned about contract under duress, undue influence, fraud
What is past consideration?
If one promises to reward another who has previously done an act gratuitously or given something of value, the promise is utilizing consideration that has past (past consideration) and is not binding. > that promise is in fact gratuitous - just like the benefit that the promisee had earlier conferred upon the promisor
Past consideration = no consideration
Need fresh consideration to form a binding contract
Example: issue of timing is relevant. Employer says you did great…I am going to give you more…that promise is not enforceable and cannot be consideration because you already have received consideration.
Is motive relevant in past consideration?
No. Motive is not relevant.
Motive cannot change a gratuitous promise into a binding contract, nor can it reduce a binding promise into a merely voluntary obligation.
Motive (for example a sense of gratitude) is not sufficient( or any) consideration
is Performance of an Existing duty consideration?
No
If a contract is altered (ie more money needed to perform) than fresh consideration is needed.
> law avoids economic blackmail
example: firefighter and police already have an existing duty to serve public
example: account agrees to complete taxes before april 30. then accountant says may not be able to due unless he gets and extra $150. you should not pay…you already had a contract with the accountant.
the scenario is expanded to many example. Is common in construction.
What is reduction of debt? what are ways to avoid
> an agreement to accept less is owed is a gratuitous promise - and therefore not binding
> what are ways to avoid
- agree to make payment before due date.
- agree to due under seal.
- have the payment made by a new party
- agree to pay less for a small trinket
> statute - law that binds creditor who accepts lesser payment
What is estoppel?
Estopped = Prevented Estop = Prevent
Y makes a gratuitous promise to X. X, relying upon that promise, incurs some expenses .Y then defaults on the promise.
> the law regarding gratuitous promises would leave X without support as a gratuitous promise is not enforceable.
the concept of estoppel would prevent Y (estopped) from denying the truth of being bound to the gratuitous promise> and therefore be held to it.
What is equitable estoppel/promisary estoppel. What are the requirements?
The court’s exercise of its equitable jurisdiction to estop a promisor from claiming that she was not bound by her gratuitous promise where relience on that promise caused injury to the promisee.
Requirements
- must be existing relationship
- must show promise has been made
- must show detrimental reliance on promise (change of position)
- promisee must have clean hands
- Can only be used a shield not a sword. ie. can only be used as a defence
What is injurious reliance?
The loss or harm suffered by a promisee who, to his detriment, relied reasonably on a gratuitous promise
What is the effect of a request for goods or services?
A request for goods or services creates an implied obligation to pay a reasonable price >
concept of > quantum meruit
If there is no mention of price then there is an implied promise to pay what the goods or services are reasonably worth
What is a contract under seal? What is an example?
A document under seal is a covenant recorded in a document containing a wax seal, showing that the covenant adopted the document as his act and deed.
It is an intention to be bound - can replace consideration.
A promise made properly under the seal of a promisor does not require consideration to make it binding.
ie. the seal shows consideration.
An example: A deed. A document under seal, which today, is usually small, red, gummed wafer.
What is The intention to create legal relations?
where outward conduct of the parties, as viewed by a reasonable bystander, lacked a serious intention to contract there is no intention to create contractual relations.
Even where an apparently valid offer has been accepted and consideration is present, there is no contract formed unless both sides intended to create a legally enforceable agreement.
What are the rules for consideration?
1) benefit can flow from third party
2) exchange must of some value but does not need to be even value(example. spouse and wife…transact for love and affection and $1. example…as small as a peppercorn) just something of value…not necessarily fair.
3) consideration must be agreed upon.
