Consideration (ch 5) Flashcards
Courts may find consideration, for example, in large donations, because “to their detriment, Offeree acted.” Enforced because of reliance on the promise.
Promissory Estoppel
If you see a contract which gives one party total discretion on whether to perform, nothing is promised
Illusory
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)
- 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.
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)!
- adequacy2. intent3. ignorance
“$1 and other valuable consideration”–just to make a contract enforceable
sham consideration
Agreement to accept promise other than what was agreed to in a contract, plus the promise that is newly agreed to.
accord and satisfaction
Accord and satisfaction differs from a counter-offer because (1)
the agreement is already in place
Accord and satisfaction comes into play with (1) and (2) amounts
- 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)
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)
condition precedent
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)
condition subsequent
Broad conception of consideration
The collected term for the whole set of elements that make promises legally enforcable
Narrow conception of consideration
Is equated with the single element of bargain
Consideration
Something promised or done that has the effect of making the agreement legally enforceable. . (Is used synonymously with bargained for exchange)
Illusory
The stated consideration does not really obligate the party. It only appears that the party is obligated.
Gift
A completed transfer of property without consideration. A person receiving a gift is not obligated to do anything in return.
Forbearance
Not doing something you have a legal right to do.
Promissory Estoppel
Theory under which a promise can be enforced, despite lack of consideration, because of reliance on that promise and knowledge of that reliance.
Pre-existing duty
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.
Sham Consideration
The Stated consideration did not really occur. The term consideration is used, but it not given.
2 things that must be in place for a promise to be supported by consideration
- 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
Two approaches to consideration
- Detriment Approach2. Bargain Approach
The detriment approach say that consideration is either a (1) by the (2) OR a (3) by the (4).
- benefit received2. promissor3. detriment incurred4. promissee
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.
- overbroad2. benefit3. detriment4. fall back
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.
- promises2. acts3. price
debt that is not in dispute (e.g., no complaints about service paid for)
liquidated debt
debt, the amount of which is in dispute; settlement of which can constitute consideration
unliquidated debt
“No Purchase Necessary” in contests seeks to avoid a (1)
- contractual relationship
Consideration cannot be valid for (1), in which the offeree does not receive something new (professor offering tutoring during office hours)
preexisting obligations
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
consideration
Difference between a contract and a gift
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)
Bargained for exchange (Bargain)
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)
Subjective Standard
A decision is based on an individuals personal bias and beliefs.
Objective Standard
Decision that is not based on individual bias or belief but rather a more general standard - ORPPERSON
Condition Precedent
An event that must occur before the contemplated transaction/contract is complete
Condition Subsequent
An event that may undo an executed contract, and which is out of the control of the parties.
to terminate a contract before all of its terms are compltely performed
rescind
mutual agreement to cancel
recision
waiver
intentional reliquishment of right, claim or privelege
an illusion; stated consideration does not really obligate the party (such as “if I like it, I will pay you”)
illusory
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)
condition precedent
event that may “undo” an executed contract (e.g., allowing return of a dress if husband doesn’t like it)
condition subsequent
