CONSIDERATION- COMMON LAW Flashcards
R. 2d § 71. Requirement of Exchange; Types of Exchange
i. Consideration requires a performance or return promise to be
bargained for.
1. Performance may include:
a. An act other than a promise; or
b. A forbearance; or
c. The creation, modification or destruction of a
legal relation.
NOT CONSIDERATION:
i. Promises based only on past actions
ii. Promises based only on moral obligation
iii. Promises that aren’t, really, such as:
1. Nominal promises
2. Settlement of claims that were invalid and with no reasonable basis for believing they might be meritorious
3. Illusory Promises
Forbearance as Consideration.
If the promisee refrains from doing something that he has a legal right to do, or forgoing some activity in which he had a legal right to engage, the court will deem this sufficient consideration.
HAMER V SIDWAY- CASE LAW
RULE: In general, a waiver of any legal right at the request of another party (forbearance) is sufficient consideration for a promise.
Adequacy and Sufficiency of Consideration.
i. Courts will not inquire into the adequacy of consideration.
ii. Courts do not police the equivalence of bargained-for
exchanges via the consideration doctrine.
1. The supposed inadequacy of consideration is no defense
to a breach of contract claim.
LUCHTS CONCRETE V HORNER CASE LAW
RULE: Forbearance from exercising a legal right constitutes adequate consideration for a non-competition agreement.
SCHNELL V NELL CASE LAW
RULE: Merely nominal consideration is unconscionable; moral
consideration is not adequate consideration.
Past and Moral Consideration.
A promise given in exchange for something already given or already performed will not satisfy the consideration requirement.
MILLS V WYMAN CASE LAW
RULE: Moral obligation alone is insufficient consideration to make a promise enforceable.
R. 2d § 82. Promise to Pay Indebtedness; Effect of the Statute of Limitations
i. A promise to pay all/part of a prior contractual indebtedness owed by the promisor is binding if the indebtedness is still enforceable or would be except for a statute of limitations. (consideration not necessary)
1. Such promises include:
a. Voluntary acknowledgement to the person owed,
admitting the presence of the indebtedness; or
b. Partial payment/collateral security; or
c. A statement to the obligee that the statute of
limitations will not be pleaded as a defense.
Settlement of an Invalid Claim is Enforceable if:
i. The settling plaintiff had a genuine belief that the claim was
valid at the time of the settlement, and
ii. The claim was, at worst, doubtful (as opposed to obviously
invalid) from the perspective of a reasonable person.
FIEGE V BOEHM CASE LAW
RULE: The forbearance from asserting a good faith legal claim constitutes valid consideration.
The Pre-Existing Duty Rule.
i. A promise to do what one already is legally obligated to do is
not good consideration.
1. Issue frequently arises when:
a. Two parties have made one contract, and then make a second contract.
b. The question then becomes whether there is consideration for the second contract to make it enforceable.
ALASKA PACKERS V DOMENICO CASE LAW
RULE: There can be no consideration for a modified contract
that arises from a coerced promise for increased compensation for performing what one is already obligated to perform.
