Consideration: Contract & Bargain Flashcards
What is a bargain?
The consideration must induce the promise and the promise must induce the consideration.
What would not count as a bargain?
1) past consideration
2) a gift, love or affection
3) pre-existing duty
4) something which is illegal
When is a moral obligation enforceable, i.e for minor and bankruptcy?
1) Minor - on a voidable contract, makes new promise to repay their debt, thus making the contract enforceable.
2) Bankruptcy - When bankruptcy is declared and debt are discharged but if it is reaffirmed then it is enforceable.
3) Statute of Limitation - the SOL ran out but a debtor promise to pay anyway.
What is a detriment?
When a promisee does something which he is under no legal obligation to do, or refrains from exercising a legal right.
What is the view for forbearance and what is the majority and minority view regarding that?
Forbearance may be consideration
1) Majority View - Neither forbearance to sue nor a compromise thereof can be good consideration if a claim is wholly invalid
2) Minority View - If a claim of forbearance is made in good faith it may be sufficient consideration for a settlement contract even if the claim is wholly ill founded.
What is a mutual promise?
In which:
1) consideration is a promise for a promise
2) both parties are extending credit to each other
3) mutual binding promise provide adequate consideration to support a contract
What is public policy for a mutual promise?
Mutual promise induce commerce by holding parties to follow through with their agreement.
What is the accord and satisfaction for mutual promise?
where the parties to an agreement resolve that a given performance by one party thereto, offered in substitution of the performance originally agreed upon, will discharge the obligation created under the original agreement.
What make a promise illusory?
If one of the promises appears on its face to be so insubstantial as to impose no obligation at all on the promisor.
What is the rule for illusory promise?
1) a contract is not mutual when only one party is bound by it.
2) in a mutual promise contract, a promise may not be expressly stated, yet the circumstances may imply the promise
What is the satisfaction clause under mutual promise?
1) a promise conditional upon the promisor’s satisfaction is not illusory because the validity of the performance is to depend on the arbitrary choice of the promisor
2) satisfaction clauses imply a duty of good faith or reasonableness that saves a contract from a lack of mutuality agreement
What are some of the remedies for contract action?
1) Expectation damages
2) Reliance damages
3) Restitution
4) Injunction
5) Declaratory relief
What is expectation damages?
A sum of money intended to place the non-breaching party in the position that party would have been in had the promise at issue been performed
What is reliance damages?
A sum of money intended to place the non-breaching party in the position the party would have been in had the promise at issue not been made.
What are the two types of cost to the non-breaching party under reliance damages?
1) Out-of-pocket costs - direct net costs incurred by a promisee in reliance on the promise prior to the breach
2) Opportunity costs - indirect net value that the promisee would have enjoyed if the promisee had taken an opportunity that the promise led the promisee to forgoes
