Contract Formation: Consideration

Question 1

What is consideration?

Answer 1

a deal in which the parties echange promises involving a legal detriment or benefit

Question 2

What 3 questions should asked when faced with an issue with consideration?

Answer 2

1. who is making the promise that needs to be supported by law? (this is the promisor)
2. Is there a benefit to the promisor or a detriment to the promisee? (need one)
3. Was this bargained for? in other words did the parties think that they were making a deal when they exhanged promises

Not doing something that you are legally entitled to is a legal detriment

Question 3

What is the rule on the adequacy of consideration? explain fully

Answer 3

A pretense of consideration is insufficient but the difference between economic value of exchanged items is not grounds for finding inadequate consideration.

Enough value, even if subjective

Question 4

Difference between illusory promise and satisfaction contracts?

Answer 4

An illusory promise is where the promisor is not really commiting to the deal. Sort of like “if i feel like it.”

Satisfaction contracts are real promises with a condition. I will pay for the painting if it meets my expectations.

Question 5

Can past consideration serve as current consideration?

Answer 5

No

Question 6

Can promising not to sue serve as consideration?

Answer 6

Settling a legal claim can be consideration but only if:
1. the P has a good faith beleif in the validity of the claim; or
2. There is a reason to doubt the validity of the claim due to uncertain law

Question 7

Contract modification

Common law has the pre-existing duty rule, what is that?

Answer 7

a promise to do something that you are already legally obligated to do is not consideration

Question 8

Contract modification

The UCC rejectes the preexisting duty rule. How is a contract modified under the UCC?

Answer 8

good faith. It is binding even without new consideration.

Question 9

Consideration Exceptions

What are the three key elements of promissory estoppel (reliance)?

Answer 9

1. A promise is made that would be reasonably expected to induce reliance
2. the promisee does indeed take detrimental action in reliance on the promise; and
3. Injustice can only be avoided by enforcement of the promise

Question 10

Consideration Exceptions

Which of the three elements do charities not need to prove do succeed on a reliance claim?

Answer 10

The second. No detrimental action need be taken.

Question 11

Consideration Exceptions

Quasi-Contract (implied-in-law) three elements

Answer 11

1. The plaintiff confers a measurable benefit on the D
2. the P reasonably expected to get paid; and
3. It would be unfair to let the D keep the benefit without paying

look for an opportunity to decline or a good reason why there was no opportunity to decline