CONSIDERATION

Question 1

Consideration

Answer 1

“Bargained for Detriment” Rest. 71:
§ (1)To constitute consideration, a performance or return promised 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 that promise.
○ Consideration (p. 281): Consideration means not so much that one party is profiting as that the other abandons some legal right in the present, or limits his legal freedom of action in the future, as an inducement for the promise of the first. (i.e. detriment is sufficient)

Question 2

Illusory Promise

Answer 2

§ A promise whereby the promisor retained an unlimited right to decide later the nature or extent of her performance is, in law no promise.

Question 3

Contract Modification

Answer 3

○ Must have new consideration for contract modification (CL)
○ Rest 89 enforces a modification if the parties voluntarily agree and if
§ (1) the promise modifying the original contract was made before the contract was fully performed on either side (i.e. executory);
§ (2) the underlying circumstances which prompted the modification were unanticipated; and
§ (3) the modification is fair and equitable
□ Compare UCC 2-209: An agreement modifying a contract for the sale of goods needs no consideration to be binding, (only good faith.)

Question 4

Moral Obligation

Answer 4

○ Promise to pay for something that happened before the Promise: Moral Obligations
○ Past consideration insufficient (Mills v. Wyman)
§ Exception for moral obligation (1) debts barred by statute of limitations; (2) debts incurred by infants; (3) debts of bankrupts
§ Material Benefit Rule: Rest. 86
□ Rest. 86(1) A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice.
□ (2) a promise is not binding under subsection (1):
® (a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or
® (b) to the extent that its value is disproportionate to the benefit.

Question 5

Promissory Estoppel

Answer 5

○ Rest. 90(1)- A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by the enforcement of the promise.

		□ The promise of the grandfather did not require her to quit her job or any specific performance but it could be inferred that she might do this because of the nature of the promise and rely on it to her detriment. PE always available as possible consideration substitute for reliance on gratuitous promises