Consideration and Promissory Estoppel

Question 1

How to defend against a gratuitous promise:

Answer 1

1. no consideration
2. want of consideration;consideration is lacking
3. legally insufficient consideration

***the requirement of consideration is not satisfied by a false recital, although some courts may enforce option Ks on the basis of a signed writing with a false recital

Question 2

What is failure of consideration?

Answer 2

Claim that a party has not performed in accordance with their promise

Question 3

How do the majority of jdxns evaluate consideration?

Answer 3

Based on a bargained-for-exchange inquiry;

***minority uses a benefit/detriment analysyis

Question 4

When is gratuitous transfer legally binding?

Answer 4

1. delivery + intent

Question 5

How is a condition on a gratuitous promise treated?

Answer 5

Not as consideration; a condition is simply something the promisee must to do get the gift

Question 6

What are 3 factors to distinguish consideration from a condition on a gratuitous promise?

Answer 6

1. the language of the parties
2. the context of the promise ( commericial v. family)
3. benefit to the promisor

Question 7

What are 2 exceptions to the past consideration rule?

Answer 7

1. a written promise to pay a debt barred by SOL
2. a written promise to pay a debt dsicharged by bankruptcy

***Minority enforces past consideration if the promisee conferred a material benefit on the promisor and not a 3rd party UNLESS a contract was involved

Question 8

What are the 4 requirements for promissory estoppel?

Answer 8

1. a promise
2. foreseeable reliance
3. actual reliance induced by the promise; and
4. injustice w/ enforcement

Question 9

How should a SOF problem be evaluated?

Answer 9

1. does the agreement fall within the SOF?
2. is the SOF satisfied ?
3. is there an alternative enforcement available? promissory estoppel or quasi-k

Question 10

What 6 types of Ks are governed by the SOF?

Answer 10

MYLEGS

1. K for consideration of marriage
2. K that wont be completed w/in 1 year of formation- not applicable to lifetime or permanent contracts
3. K for the sale of an interest in land
4. K for an executor or administrator
5. K for a guarantee or suretyship; and
6. K for the sale of goods for $500 or more
   * * Potentially real estate broker agreements and cohabitation Ks

Question 11

What are 2 exceptions for guaranty/suretyship agreements under the SOF

Answer 11

1. If the creditor discharges the debtor from his obligation on the faith of the 3rd party
2. main purpose doctrine- if the promise is to protect or promote the promisors economic interests

Question 12

How is the SOF satisfied under the common law?

Answer 12

writing required, signed by the party its being enforced against

**agreement need not be in writing, just a memo thereof is required, which can be done before, during or after the K formation and must include:

1. identity of the parties
2. nature and subject matter of the K; and
   essential terms of unperformed promises

Question 13

Under the common law what type of memos can satisfy the writing portion?

Answer 13

1- letter from one party to a 3rd party describing agreement

2- written offer and acceptance

3. letter from one party to the other repudiating , and so admitting the agreement

***a party may tack multiple docs together which once combined, satisfies the necessary requirements for the SOF; clear and convincing evidence needed for unsigned docs along with 1 signed doc

Question 14

SOF Part Performance Exception

Answer 14

1- payment of all or part of purchase price

2- taking of possession

3- substantial improvements to the property

***only applicable for specific performance, not damages

Question 15

What are SOF workarounds?

Answer 15

1. restitution for the value of benefits conferred
2. quantum meruit for services
3. Promissory Estoppel; reliance requires:
   - definite and substantial reliance
   - corroboration evidence of the reliance
   - clear and convincing evidence of a K

Question 16

UCC 2-201 guidelines for SOF:

Answer 16

1. applies if a modified K increases prices to UCC range and vice versa
2. applies to the whole K

Question 17

5 ways to Satisfy the SOF under the UCC

*SMIPS Mnemonic

Answer 17

SMIPS

1. signed writing- very relaxed standard, only requires a quantity term
2. merchants confirmation
3. in-court admission
4. part performance- actions by both parties required; payment and acceptance; divisible goods enforceable only for already paid for quantity; part performance for an indivisible good renders the whole K enforceable
5. substantial reliance- Promissory Estoppel; special protections for general contractors

Question 18

What are 2 exceptions for the UCC quantity term requirement for the SOF?

Answer 18

1. there is unambiguous basis for measuring quantity elsewhere in the K;
2. output our requirement Ks

Question 19

What does a valid merchants confirmation need to have to satisfy the SOF?

Answer 19

1. must be sufficient against the sender
2. in confirmation of the K
3. sent within a reasonable time of the making of the oral agreement,( recipient has 10 days to reject w/ written notice)
4. content of which the receiving merchant has reason to know

Question 20

How can a party prove substantial reliance to satisfy the SOF under the UCC

Answer 20

1. custom made goods
2. goos cant be resold in the OCoB
3. seller has substantially begun to make the goods
4. actions to make the goods indicate they are for the buyer
5. manufacture of the custom goods occurred before notice of revocation