Consideration Flashcards
Consideration elements
there must be a bargained for exchange
that which is bargained for must be considered of legal value, benefit to promisor, or detriment to promisee
gift
no consideration
Past or moral consideration
a promise given for something that was already done does not satisfy the bargain requirement
Exceptions to past consideration rule
past obligation will be enforceable if a new promise is made in writing or is partially performed. A subsequent promise to pay for act if the act was made by the promisor’s request or in emergency
Pre-existing legal duty
performing or promising to perform an existing legal duty is insufficient consideration
exceptions to pre-existing legal duty rule.
new or different consideration is promised
promise to ratify a voidable k
duty is owed to a third person rather than to the promisor
honest dispute as to the duty
unforeseen circumstances to discharge party
modification is fair and equitable in view of the circumstances
Modification UCC
only need good faith - no consideration
Payment of a smaller sum than due on existing debt
generally not sufficient consideration for creditor to discharge, but courts will avoid this by seeing if debtor is offering to pay earlier or pay with stock instead
Forbearance to sue
A promise to refrain from suing on a claim may constitute consideration if the claim is valid or the claimant in good faith believed the claim was valid.
Mutuality
consideration must exist on both sides. Courts will infer mutuality by supplying an implied promise
Examples of ks that are mutual
requirements and output k
conditional promises, unless the condition is entirely within promisors control
ks where a party has the right to cancel, if that right is somehow restricted
exclusivity agreements - promise to use best efforts
voidable promises
unilateral and option contracts
gratuitous suretyship promises made before or at the same time that consideration flows to the principal debtor.
All the widgets I want or All you want to sell me
Illusory
Right to choose alternative courses
a promise to choose one of several alternative means of performance is illusory unless every alternative involves legal detriment to the promisor. promise will not be found illusory if;
1) at least one alternative involves legal detriment and the power to choose rests with the promisee or a third party
2) a valuable alternative is actually selected
Promissory Estoppel or detrimental reliance
Consideration is not necessary if the facts indicate that the promisor should be estopped from not performing. A promise is enforceable if necessary to prevent injustice if: 1. the promisor should reasonably expect to induce action or forbearance and
2. such action or forbearance is in fact induced.
valid k is better
PE and damages
some courts only award reliance damages as justice so requires
