Consideration Flashcards
Consideration
whatever is give, the value (such as money, goods, a promise, or action) given in return for a promise
- a promise is only enforceable if something is given in exchange for the promise
1st component of consideration: legal sufficiency
the consideration must be either a legal detriment to the promisee or a legal benefit to the promisor
legal benefit
getting something: receiving something one did not have a legal right to receive or having someone refrain from doing something he had a legal right to do.
-having a legal right to something does not mean that you’ve actually received it
legal detriment
giving up: giving something one was under no prior legal obligation to give up or not doing something one had a legal right to do
bargained for exchange: two requirements
- the promisee’s legal detriment or the promisor’s legal benefit must have induced the promisor to make his promise and
- why am I promising? b/c you’re giving up dollar - the promisor’s promise must have induced the promisee’s legal detriment or induced the legal benefit given to the promisor.
- promise induced you to give up dollar
un-example
katie gives matt a book worth ten dollars. Later matt promised to pay katie 10 dollars for the book.
- why did she give the book? not induced, no consideration
- a promise to give a gift is not enforceable
example: matt agrees to sell joyce a ring for $5000
promise: bilateral, both parties promising
legal detriment/benefit: 5,000, ring
inducement: Joyce giving up money, induced by promise of ring. Matt is giving up ring because he’s induced by promise of money
courts will not look at the adequacy of consideration unless:
they have reason to believe fraud, duress, undue influence or limited capacity is involved.
- risk that consideration is not adequate
- don’t look to see if fair price
what is not consideration? preexisting duty
preexisting duty is a promise to do or the performance of something that a party already had to do (either by law or by contract) is not consideration (usually)
- ex. promise to give up drinking before 21, already a preexisting duty because you aren’t allowed
- helps protect from being extorted
exception to preexisting duty
unforeseen difficulties: exception when contract duties change because of the unforeseeable problems
- UCC exception: under the UCC, contract modifications do not need an exchange of consideration to be binding., in every contract with UCC, assume you are acting in duty of good faith
what is not consideration? illusory promises
the terms of a contract are so uncertain that promisor really hasn’t promised to do anything at all (I will if I want to)
-I’ll buy as many as I want, sounds like you have a contract but you don’t
detrimental reliance/ promissory estoppel
a promise not supported by consideration may still be enforceable if the other party has relied on it to his detriment: if person A
- reasonable and substantially relies on
- person B’s promise
- in a way that causes person A harm
- then in fairness, person B is estopped from not fulfilling the promise
