Consideration and Promissory Estoppel

Question 1

Insufficient Consideration

Answer 1

Promisor defending against enforcement of his gratuitous promise can argue:

1. promise is not supported by consideration,
2. want of consideration, consideration is lacking; or
3. there is legally insufficient consideration

Question 2

Failure of consideration

Answer 2

claim that the party has not performed in accordance with his promise

Question 3

Legal Detriment Test (minority rule)

Answer 3

In determining if there is consideration, the question is whether the promisee is doing something in which he had a legal right not to do or is forgoing some activity in which he had a legal right to engage

Question 4

Inadequacy of consideration

Answer 4

courts do not police the adequacy of consideration. Inadequacy of consideration (not enough consideration or too small) is not a defense, unless it amount to UNCONSCIONABILITY

Question 5

Illusory promises

Answer 5

a promise to perform that leaves performance to the discretion of the promising party is an illusory promise and will not constitute consideration (ex: i’ll sell you as many widgets as you want to order within the next two weeks for $5/piece and X accepts this offer = X promise to buy is not consideration)

Question 6

Executed gifts

Answer 6

delivery of the gift combined with a present intention to bestow the gift constitutes a binding transfer

Question 7

False Recitals of Consideration and Conditions on a Gratuitous Promise

Answer 7

1. False Recitals (“For value received, I will give x to you upon turning 21) are not valid consideration
2. Condition on a gratuitous promise - a condition is something a promisee must do to avail himself of the promisor’s benevolence - these are not valid consideration and are just conditions on a gratuitous promise (think of the poor widow moving to Bro-in-law’s house)

Question 8

Consideration v. Condition on a Gratuitous Promisee: 3 Factors

Answer 8

1. language of the parties (benevolent words)
2. commercial v. charitable or familial context (wal-mart giving out gift cards to first 50 customers); and
3. benefit to the promisor (does promisor benefit?)

Question 9

Alternative in the Absence of Consideration - 2 scenarios

Answer 9

1. past or moral consideration

2. Promissory Estoppel

Question 10

Past or Moral Consideration (Maj Rule)

Answer 10

Generally: a promise given in exchange for something already given or already performed will not satisfy the bargain requirements, EXCEPT:

1. a written promise to pay all or part of an indebtedness that has been discharged in bankruptcy is binding; and
2. a written promise to pay a debt barred by the SOL is binding

Question 11

Past or Moral Consideration (Min Rule)

Answer 11

Promise made in recognition of a past benefit conferred enforced if:

1. promisee conferred the benefit on the promisor and not a 3rd party
2. benefit is material

Question 12

Promissory Estoppel

Answer 12

Certain promises are enforced even where there’s no consideration. Elements:

1. promise: unambiguous assurance of future action
2. foreseeable reliance: reasonably foreseeable to promisor
3. actual reliance: induced by the promise
4. Injustice without enforcement

Question 13

Promissory Estoppel - Injustice w/o Enforcement: Factors:

Answer 13

1. strength of the case as a whole - is there substantial proof?
2. blameworhtiness of the breach - was a willful breach?
3. balance of the equities - how harmful is enforcement or nonenforcement on the parties?
4. level of detrimental reliance - the more detrimental the easier to enforce
5. Are there other alternatives that could prevent injustice?