Chapter 11

Question 1

Consideration

Answer 1

*a contract must be supported by consideration in order to be enforceable.
*parties may, however, voluntarily perform a contract that is lacking in consideration, but they cannot subsequently assert lack of consideration to undo the performed contract.
Promissory Estoppel: an equity doctrine that permits a court to order enforcement of a contract that lacks consideration.

Question 2

Definition of Consideration

Answer 2

something of legal value given in exchange for a promise (most common types are money, property, or performance of an act.
Consideration consists of two elements:
A) something of legal value must be given (i.e., either a legal benefit must be received or legal detriment must be deferred) and
B) there must be a bargained-for exchange.

Question 3

Legal Value

Answer 3

Under the modern law of contracts, a contract is considered to be supported by legal value if 1) the promisee suffers a legal detriment or 2) the promisor receives a legal benefit.

Question 4

Bargained-for exchange

Answer 4

contract must arise from this. *exchange that parties engage in that leads to an enforceable contract.

Question 5

Gift Promise

Answer 5

a promise that is unenforceable because it lacks consideration.
Ex. On May 1, Mrs. Colby promises to give her son $10,000 on June 1. When June 1 arrives, Mrs. Colby refuses to pay the $10,000. The son cannot recover the $10,000 because it was a gift promise that lacked consideration. If, however, Mrs. Colby promises to pay her son $10,000 if he earns an “A” in his business law course and the son earns the “A,” the contract is enforceable and the son cannot recover the $10,000.

Question 6

Promises that lack consideration

Answer 6

1) illegal consideration: a promise to refrain from doing an illegal act. such a promise will not support a contract.
2) illusory promise: a contract into which both parties enter but in which one or both of the parties can choose not to perform their contractual obligations. thus, the contract lacks consideration.
3) preexisting duty: something a person is already under an obligation to do. a promise lacks consideration if a person promises to perform a preexisting duty.
* the preexisting duty rule often arises when one of the parties to an existing contract seeks to change the terms of the contract during the course of its performance. -such midstream changes are unenforceable: the parties have a preexisting duty to perform according to the original terms of the contract.
4) past consideration: a prior act or performance: past consideration (e.g., prior acts) will not support a new contract. new consideration must be given.

Question 7

Equity-Promissory Estoppel

Answer 7

An equitable doctrine that prevents the withdrawal of a promise by a promisor if it will adversely affect a promisee who has adjusted his or her position in justifiable reliance on the promise.
In order to apply, you need the following elements:
1) the promisor made a promise
2) the promisor should have reasonably expected to induce the promisee to reply on the promise
3) the promisee actually relied on the promise and engaged in an action or forbearance of a right of a definite and substantial nature
4) injustice would be caused if the promise were not enforced.