Consideration

Question 1

What are the three questions you should ask to determine in which bargained-for consideration is missing?

Answer 1

1. Who is making the promise that needs to be supported by law? ( That person is the promisor; the other party is the promisee)
2. Is there a benefit to the promisor OR a detriment to the promisee? ( You need just one, not both.)
3. Was this bargained-for? ( did the parties think that they were making a deal when they exchanged?)

Question 2

What is Consideration?

Answer 2

A deal in which the parties exchange promises involving a legal detriment or legal benefit.

Not doing something that you are legally entitled to do is a legal detriment.

Question 3

What is not Consideration?

Answer 3

Gift promises and conditional gifts do not count as bargained-for Consideration.

Question 4

What are four tricks regarding Consideration?

Answer 4

1. Adequacy of Consideration
2. Illusory promise
3. Past Consideration- is not Consideration.
4. Promising not to sue

Question 5

What is adequacy of Consideration?

Answer 5

A pretense of Consideration is insufficient; there must be some adequacy of Consideration.

Promising to sell for $1 is inadequate.

Question 6

What is an illusory promise?

Answer 6

A promise must clearly commit to the deal or there is no consideration.

There must be a way for the promisor to breach.

Look for situations where one side is not really committing to the deal under the objective test.

Question 7

Does promising not to sue count as consideration?

Answer 7

Yes

So long as there is an honest belief in the validity of the claim and a reasonable basis for that belief.

Question 8

What is the Preexisting duty rule?

Answer 8

A promise to do something that you are already legally obligated to do (by prior contract or otherwise) is not consideration.

Question 9

What are the exceptions to the PreExisting Rule?

Answer 9

1. Change in Performance
2. A third party promising to pay
3. Unforeseen difficulties that would excuse performance
4. New Consideration

Question 10

Is promising partial payment for release from a debt obligation binding?

Answer 10

The modification is not binding if the debt is currently due and undisputed.

Question 11

What rule does the UCC follow for modification?

Answer 11

Modification only need to be made in good faith.

No new consideration needed.

Question 12

What are the Consideration substitutes?

Answer 12

1. Promissory Estoppel (or Reliance)
2. Quasi-Contract
3. Moral obligation plus Subsequent Promise ( the Half Theory)

Question 13

What are the elements to promissory Estoppel?

Answer 13

1. A promise is made that would be reasonable be made to induce reliance.
2. The promisee does indeed take detrimental action in reliance on the promise; and
3. Injustice can be avoided only by enforcement of the promise.
   * charities do not need to prove detrimental reliance when pursuing a reliance theory to collect on a charitable-gift promise.

Question 14

What is Quasi-Contract?

What are the elements?

Answer 14

Contract implied-in-law

1. The plaintiff confers a measurable benefit on the defendant;
2. The plaintiff reasonably expected to get paid; and
3. It would be unfair to let the defendant keep the benefit without paying.
   * damages are often limited, as justice requires, to the fair value of the benefit conferred.