Consideration and Promissory Estoppel

Question 1

What is a gratuitous promise?

Answer 1

A promise to make a gift. There is no consideration and is generally unenforceable.

Question 2

When is a promise is enforceable?

Answer 2

When it is supported by consideration

Question 3

Distinguish want of consideration from failure of consideration.

Answer 3

Want of consideration is the absence of a bargained for exchange. Failure of consideration is a party’s failure to preform in accordance with a promise (i.e. breach of contract).

Question 4

When does the legal detriment test stipulates there is consideration?

Answer 4

1. When the promisee is doing something they had a legal right not to do

Or

2. When the promisee is foregoing some activity that they have a legal right to engage in.
   * More Info:* Legal Detriment Test

Question 5

What is an illusory promise and what is its legal effect?

Answer 5

A promise to perform that leaves performance to the discretion to the promising party is illusory and does not constitute consideration.

Question 6

What are the requirements for an executed gift and what is its legal effect?

Answer 6

1) Intent to give a gift

And

2) Actual or symbolic delivery of the gift

If both are present, then the transfer is legally binding.

Question 7

Can consideration be satisfied by only stipulating that it was received?

Answer 7

No, the consideration has to actually be given for an enforceable contract.

Question 8

What is the legal effect of placing a condition on a gratuitous promise?

Answer 8

The condition does not make a gratuitous promise any more enforceable.

Question 9

What factors need to be evaluated in distinguishing a condition on a gratuitous promise from consideration?

Answer 9

1) Language of the parties: words suggesting benevolence rather than self interest may indicate a gratuitous promise
2) Context: In the commercial context, gratuitous promises are rare. They are more common in family contexts.
3) Benefit: Where the promisee’s detriment creates no benefit to the promisor, it is more likely a gift than consideration.

Question 10

When will past consideration make an agreement enforceable?

Answer 10

A promise in exchange for something already given or performed is not supported by consideration.

Exceptions:

1) A written promise to pay a debt barred by the statute of limitations
2. A written promise to pay a debt discharged by bankruptcy

Question 11

What are the elements required to assert promissory estoppel?

Answer 11

1) There is a promise
2) It is foreseeable that the promisee will rely upon the promise
3. There is actual reliance by promisee
4. There will be injustice without enforcement
* More Info:* Promissory Estoppel

Question 12

What factors are evaluated when considering whether there will be injustice without enforcement for promissory estoppel?

Answer 12

1. Strength of proof of the other three requirements
2. Blameworthiness of the breach
3. The relative position or equities of the parties
4. The extent to which the reliance was detrimental
5. The availability of alternatives, short of enforcing the promise

Question 13

When should promissory estoppel be used?

Answer 13

When there is not a legally binding contract