Consideration Flashcards
What is executory consideration?
Where contracting parties make promises to each other to perform something in the future after the contract has been formed
What is executed consideration?
Where, at the time of the formation of the contract, the consideration has already been performed (e.g. many unilateral contracts)
What are the 4 requirements for consideration?
- Consideration must not be past
- Consideration must move from the promisee
- Consideration need not be adequate
- Consideration must be sufficient
Under what condition can past consideration be valid?
Unless it was always understood that payment would be made for that act or service, the act was done at the promisor’s request, payment must have been legally enforceable if it was promised in advance
Does consideration need to be adequate?
No, consideration need not be adequate
What must consideration be?
Consideration must be sufficient
Is a promise to complete a pre-existing obligation good consideration?
Agreeing again to do the same thing is generally not good consideration for a new contract
What is required for good consideration in a new contract?
Need to provide fresh legal consideration
Will carrying out a public duty imposed by law amount to sufficient consideration?
No, it will not amount to sufficient consideration
Are existing obligations to 3Ps considered good consideration?
Yes, although the party faces the risk of double liability
What happens when a debtor agrees to pay part of their debt for a release from the remainder?
They are offering to do something they are already obliged to do, which is not good consideration
Is a debtor agreeing to pay part of their debt in consideration for a release from the remainder good consideration?
Generally not.
But this might be considered good consideration if:
- a new element is introduced into the payment
- a 3P pays a lesser sum
What is promissory estoppel?
An equitable exception to the general rule that consideration is required before a party is bound to a contract
How does promissory estoppel function?
It acts as a shield not a sword
What is required for promissory estoppel to apply?
A clear unequivocal promise that strict legal rights will not be enforced
What must occur for promissory estoppel to be valid?
A change in position in reliance on the promise that must have influenced the conduct of the party to whom it was made
Why is it inequitable for the promisor to go back on their word in promissory estoppel?
Because it would be inequitable to do so after reliance has occurred
After promissory estoppel, when does the promisor resume full legal rights?
Either automatically when circumstnaces which gave rise to the estoppel come to an end or following sufficient notice.
