Consideration

Question 1

What is required for modification of a K under Art. 2 UCC?

Answer 1

Good faith promises of new and different terms

Question 1

What is the traditional rule for modifications under the common law?

Answer 1

Modifications to a contract require new consideration, because a pre existing legal duty is not sufficient consideration to form an enforceable altered agreement.

Question 2

What are the basic elements of consideration?

Answer 2

Consideration is a bargained-for exchange (promise induced the detriment and detriment induced the promise) for something of legal value (that which is bargained for confers a benefit to the promisee or is a detriment to the promisor)

Question 3

What is the modern rule regarding modification of a common law contract?

Answer 3

The contract can be modified if either party has not fully performed and the modification is fair and reasonable in light of a change in circumstances which was unforeseen by the parties at the time the contract was made.

Question 4

What are the exceptions to the preexisting legal duty rule?

Answer 4

A promise to perform a preexisting legal duty is enforceable if

New or different consideration is promised

The preexisting legal duty is owed to a third party

The promise is to ratify a voidable obligation

There is an honest dispute as to the duty

There are unforeseen circumstances sufficient to discharge a party’s duty, or modification without consideration is proper

Question 5

When is consideration of lesser value sufficient to support an accord and satisfaction (agreement to accept different performance than that which was originally promised)?

Answer 5

When the consideration is of a different type or paid to a third party.

Partial payment on existing debt is only allowed if there is an honest dispute as to the amount owed or consideration is altered.

Question 6

What are the elements of promissory estoppel?

Answer 6

A promise lacking consideration is enforceable if necessary to prevent injustice if:

1) The promisor should reasonably expect to induce action or forbearance

2) Action or forbearance is induced

3) The action/forbearance was to the promisee’s detriment

Question 7

What are examples of language creating an illusory contract?

Answer 7

A contract for the sale of all the goods a party may desire, a contract in which the promisor reserves the right to change their mind (unless right is limited by an objective standard), a contract in which the promisor has the ability to choose from multiple methods of performance (unless all methods involve a legal detriment or a valuable alternative is actually selected)

Question 8

When is the promise to refrain from filing a claim valid consideration?

Answer 8

When the claim is valid, or the promisor had a GF basis to believe it was