Consideration and Promises Flashcards
What is consideration
a bargained for exchange of legal value
UCC §2–209.Modification, Rescission and Waiver. (1) cmt2
(1) An agreement modifying a contract within this Article needs no consideration to be binding
cmt2 Subsection (1) provides that an agreement modifying a sales contract needs no consideration to be binding. However, modifications made thereunder must meet the test of good faith imposed by this Act. The effective use of bad faith to escape performance on the original contract terms is barred, and the extortion of a “modification” without legitimate commercial reason is ineffective as a violation of the duty of good faith. Nor can a mere technical consideration support a modification made in bad faith
§76.Conditional Promise. (1)
(1) A conditional promise is not consideration if the promisor knows at the time of making the promise that the condition cannot occur.
§77.Illusory and Alternative Promises
A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances unless
(a) each of the alternative performances would have been consideration if it alone had been bargained for; or
(b) one of the alternative performances would have been consideration and there is or appears to the parties to be a substantial possibility that before the promisor exercises his choice events may eliminate the alternative that would not have been consideration.
§71.Requirement of Exchange; Types of Exchange. [3, 4]
(1) To constitute consideration, a performance or a return promise must be bargained for.
(2) A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.
(3) The performance may consist of
(a) an act other than a
promise, or
(b) a forbearance, or
(c) the creation, modification,
or destruction of a legal
relation.
(4) The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.
§72. Exchange of Promise for Performance.
Except as stated in §§73 and 74, any performance which is bargained for is consideration.
§73. Performance of Legal Duty.
Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain.
§75. Exchange of Promise for Promise.
Except as stated in §§76 and 77, a promise which is bargained for is consideration if, but only if, the promised performance would be consideration.
§76. Conditional Promise. (2)
(2) A promise conditional on a performance by the promisor is a promise of alternative performances within §77 unless occurrence of the condition is also promised.
§77. Illusory and Alternative Promises [1.2]
A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances unless
(a) each of the alternative performances would have been
consideration if it alone had been bargained for; or
(b) one of the alternative performances would have been
consideration and there is or appears to the parties to be a
substantial possibility that before the promisor exercises his
choice events may eliminate the alternatives which would
not have been consideration.
§79.Adequacy of Consideration; Mutuality of Obligation. (1)
If the requirement of consideration is met, there is no additional requirement of
(a) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; or (b)equivalence in the values exchanged; or (c)“mutuality of obligation.”
§81.Consideration as Motive or Inducing Cause. (2)
(1) The fact that what is bargained for does not of itself induce the making of a promise does not prevent it from being consideration for the promise.
(2) The fact that a promise does not of itself induce a performance or return promise does not prevent the performance or return promise from being consideration for the promise.
§86.Promise for Benefit Received (1)
(1) A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice.
§90.Promise Reasonably Inducing Action or Forbearance. (1)
(1) A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.
UCC §1–303.Course of Performance, Course of Dealing, and Usage of Trade. [1.2 - 4]
(a) A “course of performance” is a sequence of conduct between the parties to a particular transaction that exists if
(1) the agreement of the parties with respect to the
transaction involves repeated occasions for
performance by a party; and
(2) the other party, with knowledge of the nature of
the performance and opportunity for objection to
it, accepts the performance or acquiesces in it
without objection.
(b) A “course of dealing” is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
(c) A “usage of trade” is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage must be proved as facts. If it is established that such a usage is embodied in a trade code or similar record, the interpretation of the record is a question of law.
(d) A course of performance or course of dealing between the parties or usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware is relevant in ascertaining, the meaning of the parties’ agreement, may give particular meaning to specific terms of the agreement, and may supplement or qualify the terms of the agreement. A usage of trade applicable in the place in which part of the performance under the agreement is to occur may be so utilized as to that part of the performance.
