Consideration

Question 1

Elements of Consideration

Answer 1

1. Bargained-for-exchange
2. Legal value

Question 2

Bargained for Exchange Requirements

Answer 2

The promise induce the detriment AND the detriment induce the promise

Question 3

Can an act of forbearance be sufficient?

Answer 3

Yes if of benefit to the promisor

Question 4

Does “past” or “moral” consideration count?

Answer 4

No unless:

New promise made in writing or is partially performed

Also, preexisting legal duty is not sufficient legal consideration

Question 5

Preexisting legal duty is not consideration unless:

Answer 5

1. New or different consideration is promised
2. The promise is to ratify a voidable obligation
3. Preexisting duty is owed by a third person
4. There is an honest dispute as to the duty
5. There are unforeseen circumstances sufficient to discharge a party or modification is fair and equitable in view of circumstances

Question 6

Modification of Contracts re: Consideration

Answer 6

Generally, cannot be modified without new consideration, however, the modern view suports modification if:

1. Due to circumstances unanticipated when contract made
2. It is fair and equitable

IMPORTANT: UNDER UCC, CONSIDERATION IS NOT NECESSARY TO MODIFY, ONLY GOOD FAITH PROMISES OF NEW AND DIFFERENT TERMS

Question 7

Promissory Estoppel / Detrimental Reliance

Answer 7

Consideration is not necessary if the facts indicate that the promisor should be estopped from not performing.

A promise is enforceable if necessary to prevent injustice if:

1. The prmisor should reasonably expect to induce action or forbearance; and
2. Such action or forbearance is in fact induced