Consideration

Question 1

The necessary elements of consideration are ___________.

Answer 1

1) a bargained-for exchange between the parties; and 2) legal value

Question 2

How is “legal value” defined?

Answer 2

What is bargained for between parties must constitute a benefit to the promisor or detriment to the promisee

Question 3

What is required to have a “bargained-for exchange?”

Answer 3

Promise must induce the detriment AND the detriment must induce the promise

Question 4

Is an act or forbearance by promisee enough to show consideration?

Answer 4

Yes, if it benefits the promisor (though it need not be economic)

Question 5

What is required for consideration to be adequate?

Answer 5

Must not be entirely devoid of value

Question 5

Under what circumstances may past obligations be enforceable?

Answer 5

1) Where a past obligation is unenforceable due to a technical defense, obligation will become enforceable if a new promise made in writing or is partially performed; 2) In some instances where past act benefited promisor and was performed by promisee at promisor’s request or in response to emergency and subsequent promise to pay for act made

Question 6

How is “legal detriment” defined?

Answer 6

Results if promisee does something they are not legally obligated to do or refrains from something they have a legal right to do

Question 7

How is “legal benefit” defined?

Answer 7

Forbearance or performance of act that the promisor wasn’t legally entitled to demand or expect

Question 8

What is the Preexisting Duty rule?

Answer 8

General rule that performing or promising to perform an existing legal duty is insufficient consideration

Question 9

Does the UCC follow the Preexisting Duty rule?

Answer 9

No; only need good faith agreement to modify existing contract under the UCC

Question 10

What are the exceptions to the Preexisting Duty rule?

Answer 10

1) new/different consideration promised; 2) promise is to ratify a voidable obligation; 3) preexisting duty owed to third person, not promisor; 4) honest dispute as to duty; and 5) unforeseen circumstances sufficient to discharge party OR modification fair and equitable in view of circumstances not anticipated when K made

Question 11

T of F: Traditionally, K couldn’t be modified unless new consideration

Answer 11

True (though modern trend allows if modification due to factors unanticipated at time K made and fair/equitable)

Question 12

A ____ can be discharged through an accord and satisfaction.

Answer 12

debt

Question 13

An accord must generally be supported by _______.

Answer 13

consideration

Question 14

If, in an accord & satisfaction, consideration is of lesser value than original consideration, still OK if_____.

Answer 14

new consideration is of different type OR if claim to be made to third party

Question 15

T or F: A debtor’s offer to make a partial payment on an existing debt will suffice for an accord & satisfaction if there’s a bona fide dispute as to the underlying claim or any alteration to debtor’s consideration.

Answer 15

True

Question 16

A promise to refrain from suing on a claim constitutes consideration if ______ or ______.

Answer 16

Claim is valid OR claimant in GF believed claim was valid

Question 17

What is the requirement of mutuality?

Answer 17

Consideration must exist on both sides of a contract

Question 18

T or F: A promise to choose one of several alternative means of performance is illusory.

Answer 18

True (unless every alternative involves legal detriment to promisor)

Question 19

A promise to choose one of several performance alternatives will be upheld if ______ or ______.

Answer 19

at least one alternative involves legal detriment and the power to choose rests with the promisee of third party OR a valuable alternative is actually selected.

Question 20

What are the requirements for promissory estoppel?

Answer 20

1) promisor should reasonably expect to induce action/forbearance; AND 2) such action/forbearance is in fact induced