Chapter 12 Flashcards
Into what two parts is consideration broken into?
something of legally sufficient value must be given in exchange for the promise, and
there must be a bargained-for exchange.
Forbearance
The act of refraining from an action that one has a legal right to undertake.
What do considerations consist of in bilateral contracts?
Consideration in bilateral contracts normally consists of a promise in return for a promise. In a contract for the sale of goods, for instance, the seller promises to ship specific goods to the buyer, and the buyer promises to pay for those goods when they are received.
What do unilateral contracts consist of?
A promise in return for a performance.
Is consideration solely payment for irrevocability of contract?
No.
Other than being of legally sufficient value, what else must consideration be?
A bargained-for exchange. The second element of consideration is that it must provide the basis for the bargain struck between the contracting parties. The item of value must be given or promised by the promisor (offeror) in return for the promisee’s promise or performance.
Does a consumer’s signature guarantee an enforceable contract?
No, the contract must also comply with state and federal consumer protection laws.
Does pre-existing duty constitute a legally suffecient consideration?
No. A sheriff, for instance, cannot collect a reward for information leading to the capture of a criminal if the sheriff already has a legal duty to capture the criminal.
How may one invalidate a claim of pre-existing duty so as to create a second contract by threat to not fulfill duty?
The preexisting duty rule is intended to prevent extortion and the so-called holdup game. Nonetheless, if, during performance of a contract, extraordinary difficulties arise that were totally unforeseen at the time the contract was formed, a court may allow an exception to the rule. The key is whether the court finds that the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made.
What is past consideration?
Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain.
What is an illusory promise? Provide an example.
If the terms of the contract express such uncertainty of performance that the promisor has not definitely promised to do anything, the promise is said to be illusory—without consideration and unenforceable.
Example:
The president of Tuscan Corporation says to his employees, “All of you have worked hard, and if profits remain high, a 10 percent bonus at the end of the year will be given—if management thinks it is warranted.” This is an illusory promise, or no promise at all, because performance depends solely on the discretion of the president (the management). There is no bargained-for consideration. The statement declares merely that management may or may not do something in the future.
What is an accord and satisfaction?
A form of settlement agreement. A common means of settling a disputed claim, whereby a debtor offers to pay a lesser amount than the creditor purports to be owed.
What is liquidated debt?
A debt whose amount has been ascertained, fixed, agreed on, settled, or exactly determined.
How does a settlement on an unliquidated debt fair as a legally satisfactory consideration?
An unliquidated debt is the opposite of a liquidated debt. The amount of the debt is not settled, fixed, agreed on, ascertained, or determined, and reasonable persons may differ over the amount owed. In these circumstances, acceptance of payment of the lesser sum operates as a satisfaction, or discharge, of the debt because there is valid consideration. The parties give up a legal right to contest the amount in dispute.
What is a release? What is required to make it binding?
An agreement in which one party gives up the right to pursue a legal claim against another party.
A release will generally be binding if it meets the following requirements:
The agreement is made in good faith.
The release contract is in a signed writing (required in many states).
The contract is accompanied by consideration.
