Chapter 12- Consideration

Question 0

Two Elements of Consideration

Answer 0

1) Legally Sufficient (Something of value in the eye of the law)
2) Bargain for Exchange

MUST HAVE BOTH

Question 1

Consideration

Answer 1

The inducement to make a promise enforceable. Exceptions; gifts, promises those that are made without consideration, Are not legally enforceable.

Question 2

Legally Sufficiency

Answer 2

Something of value
AND
Detriment to the promisee, or benefit to promisor.

Question 3

Bargained for Exchange

Answer 3

Both parties have intentionally entered into a contract they had each given to something other in a mutually agreed-upon exchange for a promise or performance.

Question 4

5 Special Situations in Consideration

Answer 4

1) Illusory Promises
2) Pre-Existing Obligations
3) Modification of a Pre-Existing Contract
4) Settlement of Debt
5) Past Consideration

Question 5

Illusory Promise

Answer 5

A promise to do something that is entirely optional. (“is x wants/desires/wishes”
-Makes performance options
-RESULT: NO CONSIDERATION, NO CONTRACT!
EXCEPTION: Output and Requirement Contracts are OK

Question 6

Pre-Existing Obligations

Answer 6

Law: unenforceable for a kid to expect money from his mother for not smoking pot for one week, however enforceable if the agreement were over cigarettes the kid has a legal right to smoke cigarettes for this money so the contract would be enforceable.
Employment: unenforceable for a cop to expect money from my mother to protect her child from walking to school. The exception would be if the mother asked the cop to stay an hour after his shift to watch the kid.

Question 7

Modification of a Pre-existing Contract

Common Law Rule

Answer 7

When a pre-existing contract is modified before complete it is a breach of the initial contract and the latter contract wouldn’t be legally binding because of the lack of consideration. Example: catering service later tries to charge more per person for wedding because lobster was expensive that year. New agreement is not binding because he had not given anything up.

Question 8

Modification of a Pre-existing Contract

Common Law Rule Exception:

Answer 8

in very rare instances, when facts that were not anticipated arise that are substantial, unforeseen, and outside the contemplation of the parties then the modification is binding and enforceable.

Question 9

Modification of a Pre-Existing Contract

UCC Rule:

Answer 9

For the sale of goods, if the parties agree to modification before performance, then as long as the modification is made in good faith, then the contract is binding and enforceable.

Question 10

Modification of a Pre-Existing Contract

CISG Rule

Answer 10

Any reasonable modification that the parties agreed to is enforceable.

Question 11

4. Settlements of Debts:

Undisputed Vs. Disputed Debt Rules:

Answer 11

Undisputed Debt Rule:
-The dad is undisputed when there’s no disagreement as to the amount two or the performance. The agreement to settle and undisputed that for a lesser amount is unenforceable because it lacks consideration.
Disputed Debt Rule: The debt is disputed when there is a disagreement as to the amount or performance. The settlement of a disputed dad for a lesser amount is enforceable because there is consideration.

Question 12

5) Past Consideration

Answer 12

Pass consideration is no consideration. And act done before the contract is made is not consideration. It is promised after performance something given up after the deal has already struck is not consideration and is therefore not binding or enforceable.

Question 13

3 Exceptions to Illusory Promises

Answer 13

1) Output Contract: agreement to sell all of one’s production to a single buyer.
2) Requirements Contracts: Agreement to buy all of one’s needs from a single producer.
3) Exclusive Dealings Contract: grant to franchisee or licensee by a manufacturer of the sole right to sell gods in a defined market.
4) Conditional Contract: a contract in which the obligations are contigent upon the occurrence of a stated event.

Question 14

Contracts w/o Consideration

Answer 14

1) Promise to pay debt barred by the statue of limatations: a new promise by the debtor to pay the debt renews the running of the statue of limitations for a second period.
2) Promise to Pay Debt Discharged in Bankruptcy: maybe enforceable without consideration.
3) Voidable Promises: and you promised to perform a portable obligation that has not been previously avoided is ENFORCEABLE
4) Moral Obligation: A promise made to satisfy pre-existing moral obligation is generally unenforceable for lack of consideration.

Question 15

Promissory Estoppel (w/o Consideration)

Answer 15

The doctrine that prohibits a party from the nine his promise when the promisee takes action or forbearance to his detriment reasonably based upon the promise.

Question 16

Promises Made Enforceable by statue

Answer 16

Some gratuitous promises have been made enforceable by statute; the code makes enforceable: contract modifications, renunciations, and firm offers.

Question 17

Contracts under Seal

Answer 17

where still recognized the seal acts as consideration.