Consideration

Question 1

Define Consideration

Answer 1

1. Bargained for Exchange that has Legal Value (benefit to promisor or detriment to promisee)
2. The detriment must induce the promise
3. The promise must induce the detriment

Question 2

Past Consideration

Answer 2

NOT consideration.

Exception: Promisee acted at EXPRESS request of promisor and EXPECTED payment

Also, Material Benefit Rule Some Courts have enforced promises made by a person who received a material benefit and then promised to pay for it.

Question 3

What is voidable obligation exception?

Answer 3

When have a voidable obligation, can ratify it and create K without new consideration.

Example: minor ratifies K upon turning 18. No need for consideration.

Question 4

Preexisting Duty to 3rd party

Answer 4

If you promise to perform a duty that already exists to a 3rd party, no need for consideration and K is formed

Question 5

Unforeseen Circumstances

Answer 5

Unforeseen difficulty is NOT a substitute for consideration.

BUT if unforeseen difficulty is so severe as to excuse performance, then consideration is excused.

Question 6

Contract Modification - UCC vs. C/L

Answer 6

CL: contract modification requires new consideration.

UCC: contract modification only requires good faith. If K mod is made in good faith, it becomes binding WITHOUT consideration.

(Remember: If Sale of goods for $500, then need good faith AND writing).

Question 7

Partial Payment as Considetration for Existing Debts

Answer 7

If debt is due, then part payment is NOT consideration.

If debt is not yet due, then part payment early IS consideration.

Question 8

Elements of Promissory Estoppel (Consideration Substitute)

Answer 8

1. Promise
2. Reliance that is reasonable, detrimental, foreseeable
3. Enforcement necessary to avoid injustice

Consideration is NOT necessary.

Question 9

Lack of Capacity as Defense to Void K

Answer 9

Only the person who lacks the capacity can void the K.

Ratification - promises to pay after turns 18. This is enforceable, no new consideration necessary.

Quasi K liability - even if lack capacity, can be held responsible for necessities.

Question 10

Promise to pay debt barred by SOL

Answer 10

• A written promise to pay a debt barred by SOL is enforceable.
• No consideration required