Contract Formation - Bargain for Consideration Flashcards
two elements of consideration
- a promise to incur a detriment or confer a benefit and
- a bargain for that promise
When is performance/return promise bargained for? (R. 71)
When there are conjunctive motives.
- the promise is sought by the promissor in exchange for his promise and
- the promise is given by the promisee in exchange for their promisee
Who can the benefit/detriment be given to ?(R. 71)
Anyone, parties to the contract or not
What types of performance can be consideration? (R. 71)
- an act other than a promise
- a forbearance
- the creation, modification, or destruction of a legal relationship
Hamer v. Sidway
Paid to Abstain
A party’s agreement to incur a detriment to their legal rights constitutes adequate consideration.
Dahl v. Hem Pharma
Medication Trial for a Year’s Supply
If one party makes a promise in exchange for another party’s act or performance, and the other party completes that act or performance, there is a binding contract between the parties.
Conditional Gift v. Bargain
was promisor (measured objectively) motivated to induce the condition to occur, or was it merely a pragmatic limitation? Could promisee have performed the condition without first utilizing the promisor’s performance?
3 Corollaries of Consideration
- Past Acts Don’t Count
- Pre-existing duties don’t count
- Value of Consideration Doesn’t Matter
Exceptions to Past Acts Don’t Count
R 86. Moral Consideration can sub in for consideration for past acts if the benefit was conferred directly from the promisee to the promissor
UNLESS the promise is a gift and the promisor has not been unjustly enriched
Exceptions to Pre-existing Duties Don’t count
UCC § 2-209 modifications do not require separate consideration; does not apply among merchants
Restatement § 73. Performance of a Legal Duty
Performance of a legal duty you owe is not consideration
Similar performance is consideration if it’s different from the duty in a way that reflects more than a pretense of a bargain
Exceptions to Value Doesn’t Matter - Shams
invalid: agreeing to not bring an invalid claim, ceremonial consideration unless option contract
vaild: consideration contingent on uncertain things
Exceptions to Value Doesn’t Matter - Grossly Disproportionate
probative as to whether there was mutual inducement
Restatement 74. Settlement of Claims
Agreeing not to bring a invalid claim is not consideration unless
- the claim is in fact doubtful bc of uncertainty about the facts or the law
- the forbearing or surrendering party believes they have a good claim (some jxd require good faith belief)
Mills v. Wyman
Past Acts Don’t Count
Dad promises to pay gratuitous doctor after son’s death
Promisor did not receive material benefit from promisee AND past acts weren’t bargained for
Webb v. McGowin
Past Acts Don’t Count
Disabled for Boss
Exception - moral consideration
Alaska Packers’ v, Domenico
Pre-existing duties don’t count
If parties enter a new agreement where one party agrees to do no more than he was already obligated to do, the new agreement is unenforceable.
Dyer v. National /Products
Value Irrelevant/Adequacy of Uncertainty
Forbearance of legal claim
Traditional Approach: Legal claim must be genuinely uncertain in fact/law, at time of execution of contract.
Alternative Approach: Either (a) uncertainty in fact/law; OR (b) forbearing party had good faith belief in validity. (approach used in Dyer).
