Consideration Flashcards
Elements of Consideration
1) each party gives up something of value that and circumscribes liberty in a way to suffers legal detriment.
2) each party makes a bargained for exchange for their legal detriment.
Illusory promise
A statement that appears to be promising but is not promising anything at all.
Especially when a person is allowed to change their mind or reserve alternative choices.
A statement such as when I have the money to pay is not illustrious because the ability to pay can be proven.
An illusory promise is a statement that appears to be promising something but does not actually commit the promisor to anything at all. One kind of illusory promise is when a promisor reserves the right to change his mind, which does not bind him to anything. Such an illusory promise is not supported by consideration. For example, a promise is illusory if, by its terms, the promisor unconditionally reserves the right of alternative performances (e.g., “I’ll buy it if I feel like it.”). The modern approach, however, is that whenever possible, courts should construe a promise so as not to be illusory. Thus, if the promisor’s right to change his mind is limited by some objective standard, consideration is likely to be found and the contract upheld. A promise that reserves several alternative performances may be supported consideration if each of the alternative performances would have been sufficient consideration if it had been bargained for alone.
A promise that would otherwise be illusory may be supported by consideration if, for example, the court reads into the promise an obligation to exercise discretion in good faith. So long as the promisor has limited his freedom of action in some way, the court will find consideration sufficient to enforce the return promise.
Voidable contracts
A voidable promise or contract exists when a party to the contract has the power to disaffirm the agreement for some specific legal reason, such as the existence of fraud, duress, or infancy.
Mutual mistake
A mutual mistake is when the contract is based upon a mistake made by both parties. There are three requirements that must be satisfied before the adversely-affected party may avoid the contract on the account of a mutual mistake: (i) the mistake must concern a basic assumption on which the contract was made; (ii) the mistake must have a material effect on the agreed exchange of performances; and (iii) the party seeking avoidance did not assume the risk of the mistake.
Unilateral mistake
Unilateral mistakes arise most commonly when one party makes a mechanical error in computation. If only one of the parties is mistaken about facts relating to the agreement, the mistake will not prevent the formation of the contract. However, if the non-mistaken party knew or had reason to know of the mistake made by the other party, the contract is voidable by the mistaken party. As is the case with mutual mistake, for the contract to be voidable, the mistake must have a material effect on the agreed-upon exchange and the mistaken party must not have borne the risk of the mistake.
Do firm offers require consideration, how long do they remain open, and must it be by a merchant?
Firm offers do not require consideration to be irrevocable if made by a merchant.
When a firm offer purports to be open for more than three months, the firm offer will only be irrevocable for three months.
Firm offers do not require consideration to be irrevocable if made by a merchant.
There are no facts in this question that show substantial reliance by the lawyer on the firm offer.
The preexisting duty rule?
This rule states that if parties to a contract agree to modify the K for the sole benefit of one of the parties the modification will usually be unenforceable under common law for lack of consideration.
