Chapter 12

Question 1

What is consideration

Answer 1

The inducement to enter a contract. Something of value made in exchange for a promise

Question 2

What is legal sufficiency

Answer 2

An element of consideration that consists of either a detriment to the promisee or a legal benefit to the promisor

Question 3

What is legal detriment

Answer 3

Doing an act one is not legally obligated todo or not doing and act one has a legal obligation to do

Question 4

What is legal benefit

Answer 4

Obtaining something which they had no legal right to prior

Question 5

What is adequacy

Answer 5

Not required where the parties have agreed to the exchange, consideration will be regarded as adequate

Question 6

What are unilateral contracts

Answer 6

Only one party makes a promise. To be binding it must be supported by consideration

Question 7

What are bilateral contracts

Answer 7

Both parties make a contract that must be supported by consideration

Question 8

What is an illusory promise

Answer 8

Promise that imposes no obligation on the promisor

Question 9

Which contracts are not illusory

Answer 9

Output contract
Requirements contract
Exclusive dealings contract
Conditional promises

Question 10

What is an output contract

Answer 10

Agreement to sell all of one’s production to a single buyer

Question 11

What is a requirements contract

Answer 11

Purchasers agreement to buy from a particular seller all material of a particular kind they need

Question 12

What is an exclusive dealings contract

Answer 12

When a manufacturer of goods grants exclusive rights to a distributor to sell its goods within a specific territory

Question 13

What are conditional promises

Answer 13

A promise, the performance of which depends on the happening or nonhappening of an event to occur

Question 14

What is a preexisting public obligation and how do they influence contracts

Answer 14

Public duties or Obligations. They do not constitute consideration because there is no legal benefit or detriment.

Question 15

What is preexisting contractual obligation

Answer 15

Performance of a preexisting contractual duty is not consideration

Question 16

Modification of preexisting contracts must be supported by what

Answer 16

Mutual consideration

Question 17

What are substituted contracts

Answer 17

When parties agree to rescind their original contract and enter a new one. Both are supported by consideration

Question 18

What are the differences between liquidated and unliquidated debt

Answer 18

Liquidated debt is an obligation whose existence and amount is known. Unliquidated debt is an amount under dispute

Question 19

Does the settlement of liquidated debt constitute consideration

Answer 19

The payment of a lesser sum of money for liquidated debt does not constitute legally sufficient consideration

Question 20

Does the settlement of unliquidated debt constitute consideration

Answer 20

The payment of a lesser sum is sufficient consideration

Question 21

What is bargained for exchange

Answer 21

Mutually agreed upon exchange

Question 22

When is past consideration valid for a contract

Answer 22

When the past consideration is made in writing

Question 23

How do third parties impact consideration

Answer 23

consideration could be given to or by a part outside the contract

Question 24

What is promise to pay debt barred by the statute of limitations

Answer 24

A new promise by the debtor to pay the debt renews the running of the statute for a secondary period. (minimum payments, agreement to pay etc.) SOL for contracts are 6 years.

Question 25

How is consideration considered when promising paying debt discharged in bankruptcy

Answer 25

Maybe be enforceable without consideration

Question 26

What are voidable promises

Answer 26

A new promise to perform a voidable obligation that has not been previously avoided is enforcable

Question 27

What is promissory estoppel

Answer 27

Doctrine that prohibits a party from denying their promise when the promise takes action or forbearance to their detriment reasonably based upon the promise

Question 28

What is the statute of frauds

Answer 28

A statute requiring certain agreements like the transfer of real property be in writing