Consideration

Question 1

Consideration definition

Answer 1

The bargained-for exchange of legal detriment.

More formally:

Something of legal value bargained for and received by a promisor from a promisee
R2 §71)

Question 2

Consideration is present if:

Answer 2

1. Promisee incurs a legal detriment; OR
2. Promisor incurs a legal benefit; AND
3. Promise induces detriment; AND
4. Detriment induces the promise

Question 3

Contract modification

Answer 3

CL = Requires new consideration unless there is an unforeseeable event making performance impracticable (builder/homeowner scenarios)

UCC = Good faith only - no new consideration required

Under the UCC, you can modify a contract if it is FUN:

F - Fair and equitable
U - Unanticipated circumstances
N - Not fully performed

Question 4

Invalid consideration

Answer 4

P-PING

Pre-existing duty (R2 §73)
Past consideration
Illusory promise (R2 §77)
Nominal consideration (pretense of consideration)
Gift promises

Question 5

Consideration exceptions

Answer 5

The POPE is considerate, but is in BK and SoL

P - Promising not to sue
O - Obligors added via assignment = consideration
PE - Paying Early can count as consideration

BK - Promises to pay debts in bankruptcy
SoL - Promising to pay debts after Statute of Limitations

Question 6

What is the difference between sufficient consideration and adequate consideration?

Will courts require either or both?

Answer 6

Sufficient = legally sufficient to legally bind

Adequate = reasonably equivalent in value to performance for which it is exchanged.

Courts will require sufficiency, but not adequacy.