Consideration Flashcards
Consideration
Promise is supported by consideration if based on “BARGAINED-FOR EXCHANGE”
Consideration exists if there is a DETRIMENT to promisee - DID something he had right NOT do to, or FORGOING something he had a right TO do
No policing of adequacy - consideration need not be fair
Illusory promises
Promise of performance that leaves performance to unlimited discretion of promisor: is not consideration
e.g. paint my portrait, if I like it I’ll pay you $1000
Gratuitous promises
Promises to make a gift are not enforceable due to lack of consideration
Gratuitous TRANSFERS are binding once complete, though
Past or Moral Consideration
Promise in exchange for something ALREADY given/performed
General rule: not enforceable
Exceptions: written promise to pay debt if barred by limitations or bankruptcy
Material benefit test (MINORITY rule): promise to compensate for past benefit is enforceable if promisee conferred benefit on promisor and it’s material
Promissory estoppel (4 part test)
Reasonable reliance, with detriment, on gratuitous promise may be able to enforce even without consideration. Test:
- a promise
- foreseeable reliance
- actual reliance induced by promise
- injustice without enforcement