Consideration

Question 1

Consideration

Answer 1

the subject matter of the agreement over which the parties have negotiated; something that has legal value

Question 2

Consideration it is generally defined as 1. ________ or 2. ________ at the behest of the other party

Answer 2

1. a benefit conferred

2. a detriment incurred

Question 3

mutuality of consideration

Answer 3

1. each side must give and receive something of legal value

2. quid pro quo

Question 4

For a “detriment” to qualify as consideration, the person incurring the detriment must (3):

Answer 4

1. Give up a legal right,
2. At the request of the other party,
3. In exchange for something of legal value

Question 5

What is NOT Consideration

Answer 5

1. “past consideration is no consideration”
2. “moral consideration is no consideration” – parties must demonstrate that they bargained with each other, not simply that one felt indebted to the other
3. “a gift can never be legal consideration”
4. “illusory promises are never consideration”
5. “promises to do that which one is already bound to do are not consideration”

Question 6

“past consideration is no consideration”: it must be shown that it was meant to be ________ as part of the _______; _______ or _______ given in _______ cannot be consideration for a _____ simply b/c the parties agree with it.

Answer 6

it must be shown that it was meant to be exchanged as part of the present contract; former gifts or consideration given in prior contracts cannot be consideration for a current contract simply b/c the parties agree with it

Question 7

“moral consideration is no consideration”: parties must demonstrate that they ________, not simply that one _______.

Answer 7

parties must demonstrate that they bargained with each other, not simply that one felt indebted to the other

Question 8

“a gift can never be legal consideration”: no contract will be formed it if can be shown that ___________.

Answer 8

no contract will be formed if it can be shown that under the circumstances the true intent of the parties was to confer a gift

Question 9

“illusory promises are never consideration”: the consideration is _______ because it cannot be _______.
- how do you prove this?

Answer 9

• the consideration is legally inadequate because it cannot be objectively determined what is to be given
• To prove an illusory promise, it must be shown that one party has subjective control over its terms

Question 10

“promises to do that which one is already bound to do are not consideration”: if one is under a ___________, either b/c of a ________ or __________, a promise to fulfill that ________ is __________.

Answer 10

if one is under a preexisting duty to perform, either b/c of a contractual or other obligation, a promise to fulfill that obligation is insufficient consideration

Question 11

Under certain circumstances, a preexisting duty may be consideration for a new agreement: (there is 4)

Answer 11

1. If new or different consideration is given
2. The purpose is to ratify a voidable obligation
3. The duty is owed to a third person, not the promisee
4. Unforeseen circumstances make the duty more difficult to fulfill

Question 12

Sufficiency of the consideration concerns itself with the element of _________; the law is only interest in what?

Answer 12

concerns itself with the element of bargain; the law is only interested in the legal value of the bargain, not its monetary worth

Question 13

caveat emptor and caveat venditor

Answer 13

“let the buyer beware” and “let the seller beware”

Question 14

Nominal consideration

Answer 14

when a consideration’s monetary value is obviously smaller than the consideration in which it is being exchanged for, is always immediately suspected by the law

Question 15

Sham consideration

Answer 15

consideration that, on its face, appears to have no true value at all (typically applies to gifts)

Question 16

Conditional promises

Answer 16

• involves an element of doubt; it is dependent on the happening, or nonhappening, of some event that would trigger the obligation
• Should the consideration promised have legal sufficiency, the contract will be valid

Question 17

Promissory estoppel: what is it and why was it established? In what type of situation does this arise?

Answer 17

• a doctrine established by the courts of equity;
• arises in certain situations in which a person reasonably believes that he has entered into a contract, even though no contract exists

Question 18

the difference between Promissory estoppel and a Gift

Answer 18

For a gift to exist, it must be shown that a gift was intended; for promissory estoppel to exist, it must be shown that the promisee detrimentally relied on the promise, and that the promisor never intended to give the promisee a gift

Question 19

SPECIAL AGREEMENTS

Answer 19

types of agreements that ordinarily would fail as valid contracts for lack of consideration, but b/c of the formality of the circumstances and dictates of public policy, stand as enforceable obligations

Question 20

Accord and Satisfaction: what type of situation is this?

Answer 20

• a situation in which both party have agreed to forgo their legal right to sue in court; this mutual detriment (forbearance of the right to sue) constitutes sufficient consideration for a new agreement

Question 21

The requirements for a valid accord and satisfaction are (3):

Answer 21

1. A valid contract
2. A dispute between the parties with respect to the contract; and
3. An agreement to compromise the dispute rather than sue

Question 22

charitable subscription: what is it? What is it’s relation with the law?

Answer 22

• a pledge made to a charitable organization

- as a matter of public policy, pledges are enforceable by the charities

Question 23

Debtor’s Promises: A debtor who has been ______ by ______ is under no further duty to ________.
what is an example?

Answer 23

• A debtor who has been discharged of his obligation by the legal system is under no further duty to repay his creditors
• examples: going through bankruptcy or the statue of limitations on the claim has expired

Question 24

Gaurantees: what is it? When is it given?

Answer 24

• a written promise to answer for the debts of another, this is enforceable against the guarantor
• the guarantee is given at the same time the debtor receives the subject consideration

Question 25

For the guarantee to be valid, the following requirements must be met (3):

Answer 25

1. A valid contract is entered into between two or more parties;
2. The guarantor creates the guarantee at the time the contract is executed; and
3. The guarantee is in writing

Question 26

co-signers: what is this person? what can be done to this person?

Answer 26

• persons who agree to be equally bound with the obligor

- the creditor can go after a co-signer instead of the actual obligor b/c each is equally liable

Question 27

Formal Contracts: a contract that ___________ and is _____________ even though ____________.

Answer 27

a contract that meets special statutory requirements and is valid even though no consideration is mentioned