Consideration Flashcards
Consideration
RS 71: Requirement of Exchange, Types of Exchange
(1) To constitute a consideration, a performance or a return promise must be bargained for.
(2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promise in exchange for the promise.
(3) The performance may consist of: (a) an act other than a promise, (b) A forbearance, (c) The creation modification, or destruction of a legal relationship.
(4) The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.
What is Consideration?
To have consideration, a promise or returned promise must be bargained for. Consideration is a bargained for exchange!
Consideration
RS 17: Requirement of a Bargain
A contract requires a bargain in which there is a mutual manifestation of assent to the exchange and consideration.
What is Acevedo’s definition of Consideration?
Doing something that you are not required to do, or giving up something that you have a legal right to do, in exchange for something else.
Do courts need to consider the adequacy of the consideration?
No, courts just require that there was a bargained for exchange, but the exchange does not need to be equal. As long as it exists, it works.
Consideration
Hammer v. Sidway rule about forbearance as consideration.
yes, forbearance can be consideration. As long as the party doing the forbearing has a legal right to what they are giving up.
Adequate Consideration vs Sufficient Consideration
The courts do not care about the adequacy of the consideration. Only that consideration exists. Sufficient consideration is fine with the courts.
Consideration
Fiege v. Boehm rule about invalid claims.
If the party making the invalid claim has an objective basis for making the claim and a good faith belief that it is actually a valid claim, the claim is valid and has good consideration.
Consideration
Can past services be valid consideration?
No. Past services are not valid consideration. To have an agreement requires active consideration that has been agreed on at the time of binding.
Consideration
Define: gratuitous Promise
A promise made to do something is not bound by consideration.
Consideration
What is the overall rule of when a moral obligation can be considered binding consideration?
A moral obligation is sufficient consideration to support a subsequent promise to pay where the promisor has received a material benefit and there are future implications of the previous service.
Consideration
Are employee handbook binding to what is written within?
No, employers are not locking into what is written within the employee handbooks. They are simply guidelines.
What is an Illusory Promise (RS 77)?
A promise where the promisor has unfettered control over his performance obligation.
Satisfaction clauses are usually illusory. How can they be made legal?
Two divisions:
Objective Standard is used for: Commercial value, qualify, operative fitness, mechanical utility, actions.
Subjective Standard is used for: Items of fancy, taste, or judgement.
UCC 2-204: Supplying an omitted essential term (Wood v. Lucy)
The court can supply an additional term when it is omitted and it is reasonable under the circumstances.
(3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.
