Class 3 - Consideration, Promissatory Estoppel, Moral Obligation

Question 1

Consideration is present if…

Answer 1

o Bargained for
o Have legal value, and
o Result in a benifot to the promisor, OR a detriment to the promise

Question 2

Gifts are…

Answer 2

not consideration for lack of exchange

Question 3

Sufficient consideration depends upon

Answer 3

the value that the law will find in the promise

Question 4

the law generally does not consider the ___ of consideration

Answer 4

adequacy of consideration (the quantity of goods being exchanged)

Question 5

Court does not inquire as to the adequacy of consideration unless:

Answer 5

o Fungible (a good that is freely exchangeable) for like fungible – Ex. Brick for brick)
o Befroe decreeing speocofic performace (in equity) in a land contract

Question 6

Promises to 3rd parties will be…

Answer 6

of value and therefore good consideration

Question 7

Forbearance as consideration is dependant upon

Answer 7

• The parties must have an HONEST and REASONABLE BELIFE in the possible validity of the claim at the time of formation
• Combines both subjective standard (the sincerity) with the objective standard (was that belief reasonable?)
• Forbearnece can be based upon anything the forbearing party hass a legal right, or reasonably belives that they have a leagal right to do

Question 8

An invalid claim of forbearance will be lacking as consideration if

Answer 8

o No honest and reasonable belif in the claim, or
o A reasonable person would not hold the same belief, or
o Both

Question 9

What is an Illusory promise?

Answer 9

• An Illusory promise happns when the person making the promise hass no obligation to make that prmise

Question 10

What is an example of an illusory promise?

Answer 10

Pay me 5 bucks, and I’ll consider selling you my model train collection. I might decide not to sell, and therefore have no obligation.

Question 11

What is the UCC implied promise approach?

Answer 11

Codifies an Implied Return Promise, can either occur as output requirements, or be based upon exclusive dealings

Question 12

___ is required for an implied promise under the UCC. Wat exactly is implied in this situation?

Answer 12

Exclusive dealings. the Seller must use all reasonable efforts to supply the goods, and the buyer mart use all reasonable efforts to promise their sale

Question 13

a promise is illusory if it ___ unless ___

Answer 13

has a n option for alternate performance, unless o If the two chocess are serpeated by “or” each choice must have value
 Ex. “love me or paint my house” is not a contractable offer because love has no legal value
o If the 2 choices are separated by the word “and” oonly one or the other chaoice ha to have value
 Ex. “love me AND paint my house for $500” would be a contract because one choice has value
 Ex. “Love me and conjure spirits” would not be a contract because neither has value

Question 14

an option is illusory until ___

Answer 14

it is paid for

Question 15

Thiss is the UCC excepction for Merchants with regards to Illusory offers

Answer 15

• A Merchant’s written and signed offer with the asurence that it will tay open will be irrevocable for the stated/reaoanble time, but it cannot be irrevocable for more than 3 months - if it is an option contract

Question 16

what is the pre-existing duty rule?

Answer 16

• There is no bargiend for exchange where one party only has to do what they already agreed to do

Question 17

What are the 2 solutions to contracts that must be modified?

Answer 17

o Recind old contract and enter into a new contract (recision)
o Restructe/reqrite/amend the old contract, and promise omething new on BOTH SIDEDS

Question 18

What is the UCC approach to post-contractual modification?

Answer 18

o Modification doesn’t require consideration
o Parties can agree to exclude the abiove rule, but between merchants, the party who did not draft the agreement must sign the document
o Unenforcabel attempted modification may operate as a wavier of the rescinded or modified agreement
o A wavier under the above circumsnace can be retracted by the waviing party and demand performance of the waived term unless it would be unfair

Question 19

Past consideration is…

Answer 19

invalid consideration becasue it was not bargained for

Question 20

Define promissory estoppel

Answer 20

A promise which the promisor should reasonable expect to INDUCE ACTION OR FORBEARNECE on the part of the promise or third person and which DOES INDICE ACTION OR FORBEARNECE is binding if injustive can be avoided only be enforcement of the promise.

Question 21

What are the elements of Promissatory Estoppel?

Answer 21

o A promise
o Which the Promisor should REASONABLY expectto indice ACTION OR FORBEARNECE (a detrimental reliance) on the part of the promise or a third party
o Which DOES indice action or forbearnence
o Is bindinf IF ONLY injustice wuld be done
o Cheritable subscripctions and marriate settlemnts don’t need consideration or promissatory estoppel reliance

Question 22

What is the merger doctrine?

Answer 22

Excepction to promissatory estoppel in the name of equity (fairness) Everything that happened before the dispute is merged into the agreement, and the terms cannot be changed unles both parties agree to and sign to it

Question 23

Unlike CAN, in the US PE can be

Answer 23

an indépendant action (can be used ass a sword)

Question 24

When will a debt be owed due to a moral obligation?

Answer 24

Only if such payment is barred by:
o Statute of limitations
o Infancy
o Backrupct, or
o Material benefit
and is a SUBSEQUENT promise to pay debt