Consideration (ch 5)

Question 1

Courts may find consideration, for example, in large donations, because “to their detriment, Offeree acted.” Enforced because of reliance on the promise.

Answer 1

Promissory Estoppel

Question 2

If you see a contract which gives one party total discretion on whether to perform, nothing is promised

Answer 2

Illusory

Question 3

Analyze:1. “Sell me as many as I choose to order.”2. I’ll buy your painting if I like it.3. Sell me as many as I require4. I will cut your grass weekly for as long as I want. (termination at will)

Answer 3

1. Not promising anything - no consideration. Illusory.2. Not promising anything really, but could hold up–subjective standard, good faith3. Not illusory - consideration = exclusive sales - valid.4. Illusory. Nothing promised. No contract.

Question 4

The court does not have to look at the (1) of a bargain. Also there is no obligation for one person to tell another about inadequacy–this applies to (2) OR (3)!

Answer 4

1. adequacy2. intent3. ignorance

Question 5

“$1 and other valuable consideration”–just to make a contract enforceable

Answer 5

sham consideration

Question 6

Agreement to accept promise other than what was agreed to in a contract, plus the promise that is newly agreed to.

Answer 6

accord and satisfaction

Question 7

Accord and satisfaction differs from a counter-offer because (1)

Answer 7

the agreement is already in place

Question 8

Accord and satisfaction comes into play with (1) and (2) amounts

Answer 8

1. disputed (did not know price right away–high service bill that can be negotiated down)2. undisputed (knew price = preexisting duty to pay–cannot write “paid in full” on back of inadequate check)

Question 9

If the promise is contingent on a condition, consideration kicks in when the condition is met - but the person must make a good faith effort to meet the condition! (eg, will buy house if I can get a loan)

Answer 9

condition precedent

Question 10

If condition is outside control of both parties, the consideration kicks in at meeting of that condition–parties may not revoke (e.g., split will 50/50)

Answer 10

condition subsequent

Question 11

Broad conception of consideration

Answer 11

The collected term for the whole set of elements that make promises legally enforcable

Question 12

Narrow conception of consideration

Answer 12

Is equated with the single element of bargain

Question 13

Consideration

Answer 13

Something promised or done that has the effect of making the agreement legally enforceable. . (Is used synonymously with bargained for exchange)

Question 14

Illusory

Answer 14

The stated consideration does not really obligate the party. It only appears that the party is obligated.

Question 15

Gift

Answer 15

A completed transfer of property without consideration. A person receiving a gift is not obligated to do anything in return.

Question 16

Forbearance

Answer 16

Not doing something you have a legal right to do.

Question 17

Promissory Estoppel

Answer 17

Theory under which a promise can be enforced, despite lack of consideration, because of reliance on that promise and knowledge of that reliance.

Question 18

Pre-existing duty

Answer 18

promising to do something that one already has a legal obligation to do. It is also forbearing from doing something which the person is not legally entitled to do.

Question 19

Sham Consideration

Answer 19

The Stated consideration did not really occur. The term consideration is used, but it not given.

Question 20

2 things that must be in place for a promise to be supported by consideration

Answer 20

1. promise gives up something of value or circumscribes (limits) a liberty in some way. (Ie, legal detriment)2. Promissor makes their promise as part of a bargain in exchange for what the promisee has given up–either another promise OR execution of the contract

Question 21

Two approaches to consideration

Answer 21

1. Detriment Approach2. Bargain Approach

Question 22

The detriment approach say that consideration is either a (1) by the (2) OR a (3) by the (4).

Answer 22

1. benefit received2. promissor3. detriment incurred4. promissee

Question 23

The detriment approach has been found to be (1)–the question of whether something is a (2) or a (3) can sometimes be fuzzy. Sometimes courts will (4) on this old approach, though.

Answer 23

1. overbroad2. benefit3. detriment4. fall back

Question 24

The bargain approach says that consideration is an exchange of (1), (2) or both, in which each party views what he or she gives up as the (3) of what he or she gets. Most courts use this approach.

Answer 24

1. promises2. acts3. price

Question 25

debt that is not in dispute (e.g., no complaints about service paid for)

Answer 25

liquidated debt

Question 26

debt, the amount of which is in dispute; settlement of which can constitute consideration

Answer 26

unliquidated debt

Question 27

“No Purchase Necessary” in contests seeks to avoid a (1)

Answer 27

1. contractual relationship

Question 28

Consideration cannot be valid for (1), in which the offeree does not receive something new (professor offering tutoring during office hours)

Answer 28

preexisting obligations

Question 29

each party to a contract must get something to which that party was not legally entitled before entering the contract, and each party must give up something to which that party was legally entitled before the contract

Answer 29

consideration

Question 30

Difference between a contract and a gift

Answer 30

Consideration makes a contract enforceable as a contract, rather than unenforceable as a gift. (e.g., “no purchase necessary” in contests avoids a contractual relationship)

Question 31

Bargained for exchange (Bargain)

Answer 31

each party gets something not entitled to before the contract, and each party gives something. It is the give and take. (Is used synonymously with consideration)

Question 32

Subjective Standard

Answer 32

A decision is based on an individuals personal bias and beliefs.

Question 33

Objective Standard

Answer 33

Decision that is not based on individual bias or belief but rather a more general standard - ORPPERSON

Question 34

Condition Precedent

Answer 34

An event that must occur before the contemplated transaction/contract is complete

Question 35

Condition Subsequent

Answer 35

An event that may undo an executed contract, and which is out of the control of the parties.

Question 36

to terminate a contract before all of its terms are compltely performed

Answer 36

rescind

Question 37

mutual agreement to cancel

Answer 37

recision

Question 38

waiver

Answer 38

intentional reliquishment of right, claim or privelege

Question 39

an illusion; stated consideration does not really obligate the party (such as “if I like it, I will pay you”)

Answer 39

illusory

Question 40

event that must occue before the contemplated transaction is completed (for example, offer to buy a house if able to secure a loan–but not applying for that loan would be a breach)

Answer 40

condition precedent

Question 41

event that may “undo” an executed contract (e.g., allowing return of a dress if husband doesn’t like it)

Answer 41

condition subsequent