Consideration

Question 1

Dougherty Case
ISSUE: Did a nephew provide consideration for an aunt’s written promise to pay the nephew $3,000 at her death or before? (“value received” is consideration)

Answer 1

HOLDING: No, although the written promise contained the statement “value received,” none was actually given.

Case illustrates that a promise to make a future gift (executory promise) is not enforceable as a contract

Question 2

Dougherty Hypotheticals
Question: What if instead of the recital for “value received,” the note had asked for and the aunt had received $1.00 from nephew?

Answer 2

Court would likely find that the $1.00 was nominal consideration and given the family setting, the court would conclude that this note was really a pretense of a bargain and was really a gift. See p. 117

Question 3

Dougherty Hypotheticals
What if instead of recital for “value received,” the note had said in consideration of my nephew, Charley having been a good boy until the age of 21 or until my death (Note 1, p. 114)?

Answer 3

“Good boy” is probably too indefinite to enforce. Promises need to be definite and it is difficult to determine what the requirements are of being a good boy.

Question 4

Application of Consideration Doctrine

Answer 4

Vast majority of time consideration exists
1 party promises to pay $ &
Other party promises to (even if contingent)
Convey goods, or 
Convey intangible right, or
Convey interest in land, or
Perform or 
Forbear

Question 5

Baker: Presumption of Consideration

Answer 5

Contract recitals of consideration create presumption consideration exists
If not paid, the presumption does not exist. See Note 1, pp. 140-41

Question 6

Mutual Assent—UCC

UCC 2-204 (2), (3)

Answer 6

(2) An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
(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.

Question 7

Jannusch (Note 1, pp. 147-48)

ISSUE: Is the predominant purpose of alleged contract the sale of movable goods?

Answer 7

HOLDING: Yes, significant tangible assets were involved—truck, trailer, and equipment—and thus, sellers’ advisory services and scheduled events were not the predominant purpose

Question 8

Jannusch (Note 1, pp. 147-48)
ISSUE: Did contract exist under UCC 2-204(3) when buyers took possession of subject matter, made down payment, secured loan, replaced equipment, reported income, paid taxes, and paid seller for time and expenses?

Answer 8

HOLDING: Yes, essential terms were present, buyers consulted attorney, and remained in possession of and continued to operate business

UCC 2-204(1)
(1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract.

Question 9

E.C. Styberg
ISSUE: Did parties form a contract via correspondence or conduct for the sale of 13,000 units at an average price of $544.88 under UCC 2-204?

Answer 9

Holding: No, the communications represented ongoing negotiations

Reasoning (conduct):
Two 240 unit orders at price specified in S’s quotes were insufficient to establish a contract for 13,000 units
Usually parties have history of repeated, ongoing conduct creating contracts
Both parties deviated from usual procedure of exchanging purchase order and acknowledgement forms

Question 10

UCC: Liberal View (but still requires Definite Essential Terms)

Answer 10

2-2-4 takes liberal view of what is required for contract formation for sale of goods
UCC reduces required formalities

But UCC requires definite essential terms = identity of parties, subject matter, consideration, quantity term, price term

Question 11

Hines Contract
Browsewrap scenario
ISSUE: Did buyer have either constructive or actual notice of the terms and conditions relating to arbitration and restocking fee such that buyer should be deemed to have accepted these terms?

Answer 11

HOLDING: No.
No actual notice based on affidavit (p. 192) and
No constructive notice given fact that language–entering site will constitute your acceptance–was only available within terms and conditions and buyer was not prompted to review T & C (p. 192)

Question 12

Hines Hypothetical

What if notice (by entering site, you accept terms) at top of website page?

Answer 12

This is a stronger case that there was constructive notice but the answer would depend upon whether the language was clear and unambiguous and where the information as to the terms was located