Consideration Flashcards
What is consideration?
Consideration is bargained for exchange involving a legal benefit to the promisor or detriment to the promisee.
Not doing something you are legally entitled to do is a legal detriment.
Promising to make a gift/conditioning gift ≠ consideration.
Four examples where there is no consideration (not consideration substitutes), and therefore K does not exist?
- Nominal consideration is insufficient. However, a difference in economic value in the items exchanged is not inadequate for consideration.
- Illusory promises are not consideration. There must be a way for the promisor to breach.
BUT: satisfaction Ks are not illusory; they can be breached by bad faith. Req/output Ks are not illusory; they can breached.
- Past consideration is not consideration.
- Settling a legal claim can only be sufficient consideration if: the π has a good faith belief in the validity of the claim, or the law is uncertain as to the validity of the claim.
Can Ks be modified at CL?
Under the preexisting legal duty rule, a modification to a K must be supported by new consideration.
When is modification of a K permitted at CL?
- When separate consideration exists for the modification.
- the performance is changed
- something additional is promised - When a party promises a TP to perform an act that the party is contractually obligated to perform.
- When unforeseen difficulties would excuse performance. Modification is fair and equitable in light of the difficulties. Difficulties need to be unanticipated in making the K, but not totally unforeseeable.
Modification of debt obligation under CL:
If the debt is currently due and undisputed, then modification (in the form of promising partial payment for release from the debt obligation) is NOT binding.
If the debt is not due but renegotiated, the modification of debt is binding.
Modification in the UCC Universe
If the modification is made in good faith, it is binding even without any new consideration.
